How to Make Successful Real Estate Investments - Android

By Wasib Imdad  Real estate investments don’t come with a map, and the pathway to riches is often a meandering… Read More

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By Wasib Imdad 

Real estate investments don’t come with a map, and the pathway to riches is often a meandering one. A successful real estate investment is one of the proven ways to accumulate wealth.

Buying land, building a house to be rented out, developing the agricultural potential of a property, or making a property attractive to charge higher rents are common real estate investments.

Investing in real estate can help decrease the risk of loss, as compared to other entities, because of complete ownership of the tangible asset. Improvement in the market condition increases the value of a property.

With that being said, certain things can be done to ensure that you have the best chances for success. Graana.com brings you a rundown of how to be successful when it comes to real estate investments.

Time the Investment Wisely

To be successful in real estate investments, you need to know your local market very well. The success or failure of your purchase will be impacted by the conditions of your specific real estate market. According to experts, to become successful with investments, the first rule is to refrain from very hot markets.

At times real estate investors speak about the appreciation and rising rates of their properties, but buying when the market is at the top involves a hefty risk of monetary devaluation.

The key is to understand the trend of your area’s real estate market, for-profits every market operates in cycles. The difference between each area’s real estate market is its housing cycle. As an investor, the need is to find markets that are at the stage of expansion. At that stage the sales are rising, affordability is good and the construction is low.

Keep an Eye on the Location

As an investor, your focus should be on the property’s location within the market. Usually, people invest in densely populated neighborhoods, with basic amenities in reach.

If possible, also refrain from purchasing in an area that is overly dependent on a single economic driver, because in case that the particular industry fails, it leads to a momentous decline in the value of housing units.

With the collapse of that industry, there will be unemployment, eventually resulting in fewer people living there. With this, the demand for houses decreases, and this imbalance in the demand-and-supply pushes the prices down.

Buy Low to Yield High

Real estate investments, like dividend-paying stocks, revolve around the returns on investment, and that is based on how cheaply the property was bought. However, there are various factors to be weighed when looking at returns on investment. A house in an unsafe neighborhood may cost less, but one cannot expect significant profits out of it.

Go for Non-Traditional Real Estate Investments

Always remember that real estate investments don’t offer an equal choice between investing in apartment buildings and houses. And besides residential options, one can invest in storage units, office buildings, warehouses, and industrial spaces. All of them have an immense capacity to generate rental incomes.

With a triple-net lease, in the case of industrial buildings and offices, you may reduce overall costs when a tenant pays property taxes and covers basic insurance. Your investment yields a steady cash flow with some out-of-pocket expenses.

Uncover the Hidden Market

The reason why people buy properties from distressed sellers is that they get a price below the fair market value. Tap into the hidden market by looking for distressed sellers who haven’t advertised on the market yet.

Examples would be a couple filing for divorce and selling joint property, or a family selling their house as they are shifting to another locale in urgency. They are considered ideal sellers since they want to liquidate their property in an emergency scenario, whereas you, as a buyer, are going to get a well-maintained home.

Know the Rules and Regulations

Understand what degree of work requires what sort of approvals before you get started with it. Try to find out about the local zoning laws when converting the first floor of a residential building to a commercial space.

Do not replace the area of vending machines with a sandwich shop if local food service business rules prohibit it. If you turn a building’s basement into a rental unit, know whether that is allowed or not.

Study the Market

If you want to avoid real estate problems arising after any purchase is made, one of the best ways is to spend time understanding the market. Understanding your specific market and its operations will help you analyze and evaluate accurate prices of investment properties.

Find out how much a house in a specific area costs per square foot, and what rent can be charged for that investment property. You might also have to renovate a property to make it appeal to potential buyers.

Diversify your Investment Portfolio

To safeguard your interests, diversification of your investment portfolio is advisable, which means investing in more than one market. Avoid investing all your funds in a single geographic location, and find ventures of different kinds in various locales to maximize monetary gains and minimize the risk of losses.

Diversification can also be seen in the context of types of properties, which means investing in residential options of one city and going for commercial options in another.

Wasib is a content specialist at Graana.com

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