When most of my friends and relatives are into property investment, I also decided to invest right away. I spent thousands of dollars on the renovation, maintenance, and expansion. But the returns were not as higher as I have expected in the first place.
I was quite disappointed, obviously. But my friend told me that risks are part of the process.
With my years of experience as an investor, I have realized that it is possible to reduce risks and maximize earnings. Here’s what I have learned to invest in real estate the right way.
The Type of Property
Real estate investment is available in various types, including commercial, residential, retail, and industrial.
Which is better between residential and commercial real estate? Residential real estate is safer because the return is guaranteed literally. It is easy to find tenants. But the profit margin is lower than you think.
Commercial real estate, on the contrary, has a higher ROI. The risks are no exception. During tough economic times, vacancy and no rent payment are common.
With the greater returns, I have tried commercial real estate as a beginner, and I never considered the risks. If you are a first-timer, I highly recommend residential real estate investment. It is all right if it does not have a higher return. It is more secure, at least.
Location
You have enough budget or are ready to invest. If yes, your job does not stop there. Pay attention to the location before making any decision.
Do a thorough research on a specific area where you want to invest. Is the crime rate low? Is it near commercial centers, prominent universities, or transportation hubs?
Studying location does not happen overnight. It requires a lot of commitment and patience. But remember that all your efforts will pay off. Also, prepare your pocket. You need to invest thousands of dollars.
Condition of the Property
Another thing to pay attention to is the condition of the property. Does it have a good structural integrity, excellent layout, open floor plan, and balconies? Is it close to nice infrastructure, including well-built pavements, high quality drainage systems, and street lights? Then, it will be your best bet. Plus, it can attract tenants within a short period.
What if there are maintenance problems? Is it still a good choice? While some people still give it a shot, avoid real estate with many repair issues. Always take advantage of the property that is in perfect condition to save both your time and money.
Budget
How much money are you willing to spend on real estate investment? Knowing your budget seems a simple task. But as you calculate or sort out your finances, it is overwhelming. There’s no pressure. Take your time. Once you identify your budget, you can narrow down the variety of options in the market. If budgeting is not your expertise, there are professionals whom you can count on and trust. While the services require extra cost, it is worth it.
What’s Next?
Have you already considered the location, condition of the property, and your budget? You are now ready to invest in real estate. You will face risks along the way. But do not be afraid. As long as you know what you are doing, there is nothing to feel worried about. If you have something to add, let me know in the comment section below.
