Real estate is a business of real property. This business involves buying, selling and renting real property. It is generally considered as an alternative investment class.
Advantage of real estate:
Some benefits of real estate business are as follows:
• The foremost advantage of doing real estate business is higher returns. You will achieve much from your investment.
• The most positive advantage is well documented. This business is done on paper work. So there is less possibility of loss.
• Real estate business directly runs with the rents which receive from their tenants. They made more money by increasing rents whenever a lease term expire and even when tenants are renewed.
• Real estate income tends to increase faster in inflationary environment.
• Real estate is a tangible asset. In fact investor can do anything to its property in order to increase its value. For example replacing a leaky roof, improving the exterior, etc.
• The greatest advantage is the investor’s control over the performance of a real estate investment which generally does not happen in other types of investment.
Disadvantage of real estate:
Some negative points are as follows:
• In real estate business transaction cost are high if compare with other investment.
• As you know it is a tangible asset, it is costly to operate.
• Real estate requires an ongoing management. Management comes at a cost and demand time and resources.
• Risk, the most important terms while doing real estate business because some time it has positive and some time negative result.