Real estate investment is the safest investment one can do because the worth of properties rarely goes down. And even when it goes down, it’s only for a short period.
Investing in real estate is the most reliable and most secured option. Regardless of what happens, property prices will rise anyway and you can still make a profit. Isn’t that helping people talk about real estate?
A real estate investor is a person who invests in real estate properties. Investors generally make way more money than any other person in the same field due to lack of sufficient industry knowledge and understanding of the market trends. But with adequate information and right guidance, anybody can bag significant profit from their investment.
So, here is a blog for you to build a basic understanding of how this investment market works. Whether you are an investor or a layman planning to invest in real estate, this blog is something that will definitely help you out in developing a better understanding about how all this works. This blog is going to give you an overview of various aspects of investing in real estate. Let’s now begin with the major types of real estate investments:
Before investing, you have to get a clear idea of the different types of real estate. According to the type of property and financial instruments used, real estate is classified into following five categories:
Population is another factor that guarantees a rise in the home demand curve. Guess what happens to the population as we move ahead? It grows. As long as the population continues to get bigger, supply and demand will keep shooting up. We’re always going to need more houses than there already is.
Let us understand this with an example.
One of the primary reasons why McDonald’s make so much profit is because the company owns most of the land and property where its outlets are built. Whoever establish a McDonald’s franchisee pays the estate rent to the company.
The most interesting thing about real estate investment is that there are different strategies out there. If one does not work, there is always another one which would definitely work. We are going to have a look at the most commonly used investing strategies.
To be able to be successful in investment & flip strategy, you have to be good with marketing and trading your property. Your property should be marketable at the time you want to liquidate it.
Commonly fix & flip is used when we’re not able to sell the property so it needs to be competitive from the other units. In a general context, you have to get a property in a bad condition in a bargain sale value and then eventually spend time on fixing it and sell it for a profit.
So, you could think of renting out the property and eventually put it on the market as well. You will be able to get the rental of the property. This is the short-term buy and hold.
Do this when you cannot sell the property at the moment, probably because there is a lot of inventory, there’s a lot of people selling the property, or there are a lot of people doing the invest and flip technique and there are fewer buyers. So, you will have to wait for the market to pick up to eventually sell the property.
For this strategy, there are certain ways to do this as well. It can be self-liquidating the property (you could actually use the payment of your tenant to pay for the amortization).
There are a lot of people who use this strategy. For eg: If you have children, they would need a passive income after college so they don’t have to support their kids anymore. The children could get the money from the rental property. It is a great strategy.
This is for those people who do not want to rent at all. For the ones who think renting is really a waste of money.
So, technically what they do is just buy the property that fits for them at the moment. For eg, a millennial or agency would buy a 22 square meter studio unit property. Eventually, this millennial wants to sell the property to upgrade to a bigger property.
Live in flip is a very good strategy for you to catch the property prices. If you cannot afford a bigger property now, at least buy a smaller property. You can renovate it and sell it after some time.
For eg, If you are migrating to somewhere else and you have no use with the property, you can simply rent it out. This is a good strategy to make a rental portfolio.
This strategy can make investing easier and this is commonly used for commercial or retail properties. Syndication does not have to be formal. The important thing in this strategy is trust and partnership.
There are a lot of clear benefits of investing in real estate. Although it might take long research to be a good investor, this action is not going to make you regret any part of your life. Grab good knowledge on the streams and strategies of real estate investment and also about the best places where you can implement it.
Thank you for reading this article. Hope you understood – what real estate is, the major types of real estate, and the strategies to invest in real estate.
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