Real Estate

Real Estate

Once you have built up wealth, there are several ways to make it work for you. You could put it in a savings account, invest in the stock market or invest in real estate.

Investing in real estate is investing money in buildings, i.e. the land and associated buildings that are attached to the ground. The purpose of this is to achieve returns, so that you ultimately earn more money than you have invested. You can invest in real estate in different ways, often a distinction is made between direct and indirect investing in real estate.

Direct investing means the actual purchase of a real estate object, and indirect investing in real estate is on the stock exchange in related real estate funds and institutions.


Direct investing in real estate

An important advantage of investing directly in real estate compared to saving and investing in shares is that it is less sensitive to inflation. When prices rise, rents and property values ​​generally rise with it. It is also often seen as spreading risk. For example, if you invest in stocks and bonds, a real estate investment can protect you against a fall in the stock market. In addition, you choose what you invest in. Real estate is also a kind of production resource, because you receive a return in the form of rental income, so you benefit from your real estate investment every month. With this you pay the monthly costs and possible financing of the property. What's left of it can be reinvested or used to supplement your income.

A disadvantage of direct investment in real estate is that you do need knowledge and expertise, because you have to make a good choice in what to invest in and you must also be responsible for the management and management tasks yourself. Second, your investment is not liquid, unlike investing in a real estate fund where your money is readily available. In addition, you need more equity when investing directly in real estate.

There are also other risks associated with investing in real estate. For example, you may have to deal with vacancy and non-payment. It is also questionable whether the long-term rent is still sufficient to cover rising interest rates.


Indirect investing in real estate

There are several advantages and disadvantages of investing in indirect real estate. First, you don't need any specific knowledge. In addition, real estate funds make it possible to structurally spread risk by investing in real estate, in for example, different locations or types of real estate. The third advantage is that getting in and out is very easy because you don't have to wait for a buyer. You can also invest in a real estate fund with a relatively low amount.

 

A disadvantage of investing in indirect real estate is that you cannot choose in which real estate you invest. In addition, the value of a share can be strongly influenced by the 'feeling' on the stock market, while the value of real estate does not move in the same way in reality.