Real Estate Investment for beginners Expectations vs Reality

Real Estate Investment for beginners Expectations vs Reality

Investing in property is one of the oldest money-making alternatives in the world. It is a stable sector over time, although it has its moments as any other industry. But there is always supply and demand of properties for commercial or housing purposes.

One of the main problems that I see is the frustration that many professionals have for not being able to live up to their expectations or the expectations that have been imposed on them.

Expectations vs Reality

For the real estate developer, it is disheartening to check the high expectations that customers have in their search for the better property. To some extent, the difference between expectations and reality is due to aspirations that move away from the way of life of buyers and in which other factors influence.

The desire to have more bedrooms, for example, is often related to several factors that lead to error. The first is the idea that the greater the functionality, the better the possibility of reselling the home. The reality is that an oversized residential unit is more expensive and, therefore, more difficult to place.

In addition, the price per square meter is usually lower when the house is larger. Some homes become unsaleable because of their disproportionate size. These all factors make a huge difference in expectations vs reality in real estate business.

I understand perfectly that every new investor goes through moments of uncertainty and even fear before allocating their resources in a business. But in reality, this is one of the first challenges to overcome. It is necessary to dare, but at the same time act responsibly and educate yourself financially is a way to do it.

Beginners Guide to Real Estate Investment

There are certain aspects you must foresee before investing in real estate business. While investing in your startup you have to be careful, consultancy and other opinions on your investment really disrupt your business repo.

Try to analyze the ground reality of your business such as marketplace, location, the window of opportunity you have. Whether it’s commercial or residential it doesn’t matter, market research really helps you out in such cases. 

I am listing down some of core business steps to take for a start-up investor:

Pay attention to key Metrics

The crucial aspect in real estate business that you have to keep an eye on is the analysis of construction rate and vacancy rate of specific marketplace. As market goes up, more and more constructions begin which is profitable at the end. On the opposite side if houses don’t sell, the prices will drop at higher pace. These two factors were the actual reason behind 2008 real estate crises. So, while investing in it keep these two figures under keen observation.

Buy REIT’s (Real Estate Investment Trust)

Real estate investment trust REIT’s gives you an opportunity to invest in real estate without the existence of physical one. REIT’s pays a high ratio dividend which at the end makes them a good investment after retirement. There are different types of REIT’s it all depends on which one you choose for your investment. REIT’s directly proportional to risk. REIT’s like non-traded are not preferable as they aren’t sold easily. If you are new investor then try public traded REIT’s, you can purchase it through online brokers.

Use online Real Estate Platforms

Nowadays, online real estate platforms are the easiest way out. There are companies that connect investors with borrowers to lend some money for their business needs. Such Companies include Lending Club. The thing is you need certain amount of money to earn some. Just gain the trust of your investor by pitching up your idea and lend some money. In these scenarios they have to take initiative because there are 50-50 chances of failure and success.

Fix up and resell all

In real estate sometime, it’s beneficial to buy a property that looks terrible. Once that property is yours, invest some money in its renovation. Sometimes people try flipping strategy. In which they invest in a property that isn’t of much worth, hold that property for some time until their market price boosts up. These flipping strategies involve in depth market analysis and accurate prediction. Otherwise it will end up in huge loss.

Build a Killer Team

The best approach that I personally prefer is building a killer team. If you are working in a team with mentors and investors that will tend to support you then you are lucky. Create the best of relation with brokers that will provide you better investing opportunities.

Examine your financial situation along with your long-term goals. You can start by flipping properties, move to property income, and then get more benefits with investment properties. You could end up using a combination of these strategies to make your career in real estate investing.

Featured Image: Shutterstock

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