It is no wonder that so many people are interested in investing in real estate. Not only is it one of the worlds largest industries but real estate investments are traditionally one of the best returning investments in the long term. That does not however mean that it is easy and accessible. Whilst it is a great way to build wealth not everyone will be able to make it as a real estate investor.
So here we examine some of the questions that might help you decide whether traditional real estate investing is right for you.
A residential buy-to-let investment is a great way of securing cashflow. Tenants in the property pay a monthly rent and cover costs such as insurance, vacancy fund, management fees. You will then receive a monthly cash flow, which can be perceived as an additional salary.
If, when choosing a property, you choose a solid opportunity with strong growth prospects, then it is possible that by the time you come to sell your investment it will have grown in value. This can be one of the most lucrative ways to make money from real estate investing.
Real estate is a ‘bricks and mortar investment’ which means that it is backed by something tangible and real. Even in market downturns properties still have an intrinsic value and over time are more likely to appreciated in value than depreciate.
Do you have the capital available to invest?
Even once you have decided to invest in real estate it is still important that you can afford it. Many people make the mistake of trying so desperately to purchase a real estate investment property that they use all of their available finances to do so. This not only means that they can then struggle to pay for initial maintenance, unforeseen legal fees or difficulty to find a tenant but also that more often than not, they purchase a property that is not actually as valuable as they think and turns out to be a poor investment.
Do you have the time to find the right opportunities and manage them?
Investing in property in not simply a case of choosing the first property you come across and buying it. Amongst other things you need to have the time to do a proper due diligence on the property, make sure that the property is in the correct condition, ensure that there is a strong enough rental market for you to find a tenant and be able to find a tenant for the property. Even after choosing and purchasing the property a lot of time is required to find tenants, deal with their requests and manage the ongoing running of the property, including repairs and emergencies.
Do you have enough knowledge on the area you want to invest in?
Not only is it important to do your research on the property you want to invest in but also to understand about the location of the property. Not only is it important to check that there is strong rental demand and good rental prices in the area but you should also do due diligence on any local developments, government infrastructure projects that could affect the value of your investment, positively or negatively.
What other knowledge or information is required?
Almost every first time real estate investor experiences costs that they did not anticipate. Make sure that you have as much information as you possibly can about the property, how you will manage it and what are the actual closing costs of the purchase. Will you need to bring in a lawyer, what real estate taxes will you need to pay, will there be association costs, will you need to use an accountant, do you need a property manager to run your investment?
Do you have the ability (or patience) to wait?
Whilst you will begin receiving a positive return from your rental after only a couple of months do you have the patience to stay in for the long term. Real estate is not an investment that you can exit whenever you want, you need to be able to maintain your position for some time. Therefore if you are looking for an investment that you want to be able to liquidate immediately then real estate probably is not the best option.
As you can appreciate from the points stated - real estate is usually a great investment opportunity, but before deciding to take the plunge and make your first solo real estate investment do consider the questions above, it will save you time, money and stress.
If today you can’t answer the questions above positively but are still looking to take advantage of real estate investing then why not consider an investment platform such as Bricksave. It allows anyone to benefit from instant real estate returns in dollars and removes many of the risks or hurdles associated to investing in real estate.
October 18, 2019
PODCAST: real estate crowdfunding, a profitable investment alternative.
Sofia Gancedo, COO of Bricksave, explains this new type of real estate investment in Brazil, which allows people to invest in finished properties in the US, Europe and Asia from …
Real Estate Crowdfunding: Bricksave the proptech startup for investors
Learn about Bricksave's real estate crowdfunding, invest online in properties around the world from USD 1,000 Find out more
5 real estate crowdfunding statistics for Latin American investors
Crowdfunding has boomed in recent years, and real estate is yet another industry being revolutionised by this democratic form of investment. For as little as $1,000, you can enjoy your …