Most often than not, real estate investments are considered long-term investments simply because they are not highly liquid assets unlike stocks and bonds. Liquid assets are those that can be easily converted to cash or profit in a short span of time. Due to its long-term nature, investing in properties entails big money, big risks, and big gains or even losses. It is not for everybody; the best real estate investors are the ones who have the knack to spot opportunities in places and properties way ahead of time.
Properties investment is generally about buying a certain property or land and selling it at a profit in the distant future. The purchasing part is easy if you have the money; selling it is the challenge. Of course, not all properties are highly sellable; so you have to learn how to evaluate properties so that you can spot the ones that you are sure you would be able to sell in the future at a higher price. The key to real estate investment is to buy low and sell high!
It’s all about the timing! The best time to get the best deals is to buy when property rates are low in a certain location due to downturns. When looking for a property to buy, check the following factors:
1. Residential properties and commercial properties nearby. Watch out for signs of development within the neighborhood and nearby neighborhood.
2. Transportation facilities. Good transportation system in the area is a big plus.
3. Recreation facilities such as outdoor parks and malls .
Sometimes, real estate investments involve more than just buying and selling. Some investments require restorations, bathroom plumbing and swimming pool maintenance. If you purchased a run-down house or an old building or condominium, you have the choice to fix it so you can sell it at an even greater price in the distant future. This type of real estate investment is tricky because you have to know something about architecture and remodeling. If you made an incredibly big mistake in estimating your costs in fixing up the place, you might end up blowing your investment. To maximize profits in this kind of property, check for hidden defects, parts that need to be repaired, parts that needs to be renovated, etc. Some properties, if properly remodeled or renovated, can be sold thrice or even four times the purchase price. You need to consider the costs in fixing or remodeling the property and the potential of the property after fixing it before you buy it.
On the other hand, other real estate investments involve leasing of the property. You can buy an empty lot to build an apartment complex. In this kind of investment, be ready because investment returns could take an even longer time.
There are four things to consider in this type of investment:
1. Price of the land.
2. Construction costs .
3. Cash flow. If you used financial loans to purchase land and build the apartment, just make sure that you factor in the interest rates and payment schedules when you do your financial planning.
4. Number of tenants you can have. The number of tenants you can accommodate determines your income per month.
Having an apartment leased can actually be a very stable and profitable investment since every month you are guaranteed that you will receive money. You just have to make sure that your cash outflow and inflow are correct because a lot of unexpected costs take place in this kind of investment such as damages, repairs, wear and tear, etc.
If you want an easy way to make money in real estate, buy land and lease it for commercial use. This is a less risky type of investment since you are only paying for the lot. To get the best lot, watch out for lands that are bordering highways because these are the ones that normally come handy for gas stations, warehouses, etc. There are so many ways to make real estate investment work for you. You just have to watch out for opportunities in unexpected places.
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