From time immemorial, Real Estate has been one of the most profitable and lucrative areas of investment. With a rising population and ever-increasing housing needs, many have considered the real estate sector to be recession-proof from the point of view of investments.
However, it should be pointed out that taking the right investment decisions when it comes to real estate can be challenging. It is only when all the variables fall into place, does a real estate investment turn lucrative.
In this article, we speak to leading real estate investment experts and ask them to address some common issues, which investors face. In addition to this, we also discuss some challenges, which investors might face when it comes to real estate investing.
Challenges faced by Investors in the Real Estate Industry
As compared to other areas of investment, real estate requires a large amount of capital infusion. This is because a house or an apartment is very expensive. If you were looking to do some slight remodelling and flip it, it would add to the investments in a major way.
Like any other investment model, investing in real estate can be risky, if you are not aware of all the facts. This can lead to serious issues and has the potential to land you in some huge losses. This is why experts suggest that it is always a good idea to look up cardone capital review, before you make up your mind.
If you are taking financial help from a lending institution, the rising interest rates can also be a deterrent. The recent economic contraction brought upon by the pandemic has made banks very sceptical when it comes to handling out loans to investors.
List of 5 Things you should know before investing in Real Estate
- Do not be guided by Emotions in this sector-
A beautiful house or a scenic apartment can conjure up emotions unlike any you have ever seen. However, experts state that you should always approach any property from a very rational and strategic point of view. See the facts for yourself and then sleep over the decision. If it sounds as bright and as promising as it did after evaluating all the pros and cons then only go for it. It is also better, if you listen to experts, rather than your peers.
- Doing extensive research is important when investing in real estate-
Doing your research means finding out everything there is to know about the property. This can be the taxes, electricity consumption, the quality of the structure, etc. It should also be about whether the property is in a good school district, has proper security or is in a safe, crime-free neighbourhood. All this research will help you make an informed decision. It can also help you when it comes to negotiating over the price.
- Figure out if the investment is going to be affordable or not-
According to experts, when it comes to real estate, most people make impulsive decisions based on their emotions. They do not see the state of their finances and jump on to something, only because they feel it in the gut! Do not make this mistake. See whether the new investment is within your reach or not. Evaluate your financial situation with an advisor and see whether you will be in a comfortable position to afford the investment.
- As an Investment, Real Estate is for Long-Term growth-
Flipping properties is not something all of us can do or achieve success. This means that if you are looking to invest in real estate, you need to be prepared for the long haul. New investment in a property, might give you returns after a period of three to five years. This means that you need to understand that your investment will lay for a very long time before it starts to appear profitable in nature.
- Start Small if you are getting into the Real Estate investment game-
This is one advice, which almost all experts give to first-time investors. The key to becoming successful is to start with a small property and go through the grind to see whether this is something for you or not. Ideally, you should start from a small apartment, or even a store and go through the entire drill or doing research, putting it up for rent, and so on. This will help you minimize your risks and exposure and offer you a good learning curve.
Read More: Top 5 Investing Tips for Canadians in 2020
The Final Word
By paying attention to the contents of this article, you can ensure that your foray into real estate investing is not fraught with risks. Can you think of some other real estate tips, which first-time investors should look into before making an investment decision? Let us know below.