It depends on your situation and financial goals. Putting cash down will give you more immediate equity and may reduce your loan amount, but it might not be the best option if you need that money for other investments. On the other hand, borrowing capital from the bank may help you leverage your returns, but you’ll have to weigh the risks of taking on a larger loan and the interest costs associated with it. Ultimately, the best decision depends on your financial situation and the goals you’re trying to achieve.
The portion of your financial portfolio that should be in real estate depends on your investment goals, risk tolerance and overall financial situation. Also, if you are fixing up a property up to sell, it also requires having enough capital and resources to buy, renovate, and hold the property for long enough for the value to appreciate. So you may need to have more cash on hand.
It also requires the ability to accurately evaluate the risk and potential return when investing in rental properties. Lastly, if someone invests in a real estate market with too high of risk, he or she increases the possibility of substantial losses. Learn your market. Generally, experts recommend that you invest between 10% to 15% of your total financial portfolio into real estate.
In terms of liquidity, real estate also offers advantages over other asset classes. While you may not be able to sell a stock or a bond quickly, real estate can be sold relatively quickly. This allows you to take advantage of better economic opportunities that may not be available for other investment options. Additionally, there are many tax and other financial benefits that come with owning a property, such as deductions for interest, taxes, insurance, and repairs.
Overall, real estate can be a great way to build up wealth, provide financial security and liquidity, and generate income through rentals.
