5 steps to choosing the right real estate investment for you

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New to real estate investment? No problem. The internet has opened up a world of opportunities from the comfort of your sofa. And it is making the research side of global property investment much easier too. Here’s how to get started. 

Real estate can be a lucrative opportunity, but only if you find the right properties. Properties need to be in popular spots, and it’s crucial to mitigate against any local market drops to protect your investment. If you don’t have a professional portfolio manager to take care of making the key decisions about your investment strategy, you’re not alone. Lots of real estate investors manage their own portfolio successfully by choosing properties well and keeping a close eye on the market. 

Here’s how it’s done. 

Step 1 – Research the market

The first thing you need to do is have a look at the current real estate landscape. Are house prices rising or falling? Which locations are doing well, and which ones are stagnating? Which property types are performing well, and which ones are struggling? 

Thorough research will help you choose the best time to invest and narrow down the properties you’d like to target.

Step 2 – Choose the location

You are not restricted by where you live when investing in real estate – you can put money into a property down the road or thousands of miles away. The advent of online real estate crowdfunding makes investing in property abroad even easier. You can thoroughly research locations and properties from the comfort of your sofa, and you only need to invest small amounts, making it accessible to those without large sums of capital. 

There are a few signs that a location will deliver good returns. Look for high tourism rates, a good track record of increasing property prices and new developments getting underway. 

Step 3 – Select the type of property

The type of property you choose to invest in can be the difference between making good returns and suffering a loss. Broadly speaking, the first choice you’ll have to make is whether to go for commercial or residential property. If you opt for residential, the choice is then between established properties or new builds. New builds are riskier and require more input, while established properties are more stable and require little in the way of upkeep.

The next choice is between buy-to-sell properties versus rental properties. Buy-to-sell properties give you the opportunity to renovate and decorate, which is a dream for many. This approach sees you selling the property as soon as possible, and you’ll need to time the market carefully. Rental properties, on the other hand, enable you to earn an income from rent and generate returns from capital growth when you come to sell. Another option is to invest in a property for holiday lets, but this route can be risky as holiday destinations fluctuate wildly in terms of popularity.

Step 4 – Decide between long-term versus short-term gains

Before investing in property, establish your ultimate goal. Would you prefer to gain returns straight away or build them slowly over time? Lots of people will be attracted to the short-term option, but fix-and-flip opportunities can be very risky if the local market suddenly slumps.

Opting for long-term gains can provide more investment security. Long-term investment strategies are designed to gradually amass returns over a number of years, and they enable you to generate rental income as well as capital growth. 

You should also think about how involved you want to be with your investment. Becoming a landlord involves a huge amount of paperwork and property management, which may suit you if you don’t work. For a more ‘hands off’ approach, you can invest online through a collective fund or by crowdfunding a property. Thanks to the internet, you can now easily send money overseas to invest in properties across the globe, making these opportunities more viable for new investors.

Step 5 – Diversify your portfolio

When investing in property you should always be prepared to diversify. It is not advisable to put all your money into one property because this leaves it vulnerable to market volatility. Spreading your money across multiple properties allows you to mitigate risk and increase the potential for returns. You will not be subject to the success or failure of just one property, so if one investment isn’t performing, the performance of others in your portfolio will balance it out.

The growth of online investment via real estate crowdfunding makes diversification a lot more accessible. You can invest smaller amounts in a number of properties across different locations, instead of paying the full amount for just one.

Bricksave offers a straightforward, accessible way for investors to enjoy a share of the global real estate market. Take a look at how it works and browse properties currently available for crowdfunding.

Bricksave Admin
Bricksave Team

February 11, 2021

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