Good afternoon. Today we will talk about investing in real estate, but not about the benefits and difficulties of this activity, but rather about the psychology of human choice. We will not consider the option when people want to buy an apartment just to live in it. Although, it is clear that this is a serious reason. Today we will not touch upon the topic of buying a home by a family, when the more correct decision is to live in a rented apartment and keep savings in some other financial instruments. These are all topics for individual articles, which we will definitely touch on with you. And today we will talk about why people invest in real estate in order to save and increase capital, without choosing other, sometimes more profitable, means of preserving their money.
A tit in the hands, not a pie in the sky
It is natural for a person to see the result of his activity in the moment. It is very pleasant, having invested your funds, to start receiving passive income from them. It is pleasant from a psychological point of view. Therefore, people like it so much, for example, to receive interest on the balance on a debit card. The dopamine splash is nice.
An investor who has bought an apartment and started renting it out experiences similar feelings. Constant cash flow instills confidence in your investment. This is not for you to buy securities and wait for them to rise in price in order to sell, even if the income from this "crane" in the end may be greater.
There will be no more earth
All construction organizations are well aware of this, and therefore more and more high-rise buildings are being built. Investors are actively studying land prices, as well as such an abstract concept for Russians as "the right to air." This is a quota for the construction of multi-storey buildings, which large developers can eventually buy from a low-rise building.
By the way, it is interesting that in European countries it is often forbidden to build multi-storey buildings in historical places and in the near future there will definitely not be high-rise buildings there.
People want to save, not increase
There are two great rules from Warren Buffett: 1. Never lose money. 2. Don't forget the first rule.
Indeed, companies go bust, currencies collapse, countries fall apart, and houses stand still. Yes, of course, their cost can fluctuate a lot, but something real remains so, and we smoothly move on to the next point.
People love something tangible
Abstract dividends, incomprehensible debt obligations, other securities, all this does not inspire confidence. So I understand, a chest of gold, a diamond necklace, a painting by Claude Monet, the house and the land under it. These are things that can be touched, they can be seen, and therefore their value is easier to appreciate. A gold bar is not a copyright or a patent for you.
As a summary to this point, I would like to recall an interesting phenomenon. When the world began to move from paper money to digital, i.e. bank cards, people have become easier to part with money. They ceased to be something tangible and material.
Please write in the comments what I forgot to mention, and what motivation for investing in real estate seems to you the most compelling.
