Investing in Real Estate – All You Need To Know
The general idea behind every form of investment is to put in some money in the present into a venture that has the potential to guarantee higher returns in the future. Investing in real estate is one area that seems to guarantee potential long term returns and many more are looking towards investing in real estate.
Why Invest in Real Estate?
Well, if you have not decided where to invest your resource, here are five reasons why you should invest in real estate:
– Potential to generate consistent cash flow;
– real estate investors enjoy several tax breaks and deductions;
– will help you build equity and accumulate assets over the year.
Different Ways to Invest in Real Estate
Even after deciding to invest in real estate, there are several investment options available. We mention four:
1. Joining a Real Estate Investment Group (REIG) where you own rentals through a company which oversees the daily management of the rental.
2. Owning a rental property
3. House flipping where you buy a property for less than its value, hold for a few months and sell at its value and make your profit.
4. Real Estate Crowdfunding where investors connect with real estate developers and invest in commercial deals. Notably, the existence of crowdfunding platforms makes real estate investing accessible to individuals, especially novice investors. While such platforms spell convenience in shopping and participating in investment deals, investors still have to do their due diligence before committing their money. Is CrowdStreet, YieldStreet, or another platform the right place for you? Check out reviews on YieldStreet, including those from other investors.
Considerations When Investing in Real Estate
Investing in real estate will either make you a whole lot of money or tie up what you have and lead to a significant loss. But you don’t have to lose. Not if you consider the following before investing in real estate
1. Location
Properties in areas with higher population tend to do better in terms of increasing value as demand rises. Also, proximity to markets, warehouses, transport lines, scenic views and neighbourhood status all tend to increase the commercial property valuation. When choosing property location, don’t just think in the interim but consider the future changes that may come to the area with development and choose only those properties whose values will continue to increase because of their location.
2. Market valuation
A proper property valuation will help you know just exactly how much you need to seal the deal from purchase to listing, insurance and taxation for your new property. It will help you prepare and stay within your means
3. Hiring a real estate agent
It is important to conduct agent comparison before choosing a real estate agent to guide you through your investment season. Consider choosing an agent whose experience reflects a knowledge of the local market, success in making sales and getting the best values for properties. Getting someone with tons of experience onboard will boost your residential property management processes while you save both money and time in the long run.
4. Use of loans
Loans may save the day but committing all of your future earnings to pay back the loan with interest can quickly get burdensome. Be sure that you do not borrow beyond what you have the ability to pay back, a phenomenon known as over-leveraging.
New construction or Old property?
There is an advantage to choosing to invest in either an old property or a new property. An older property will mean you spend a lot less to improve. This is in stark contrast to the increased cost associated with new constructions.
The Overall Real Estate Market
Market trends fluctuate often and being aware of the trends will help you know when it is the right time to invest. For example, the coronavirus pandemic seems to have caused the prices of properties to fall making this a good time to invest in real estate.
The Bottom Line
Investing in real estate is the way to go and equipped with all this information, you can now make the right choice as to the kind of investment to make in the real estate industry and what should be your expectation in terms of returns.
