Real Estate Investment Goals
Each investor will have to answer the question: what is the main goal he pursues, going to invest in real estate? The investment strategy, the choice of the object, the time for which the finances are invested, as well as the risks, profitability and payback of the project depend on this. Research shows that no more than 20% of potential investors set specific goals. This explains why investment often falls short of expectations. Make sure that:
You understand what resources are needed.
· You have sufficient financial capacity to carry out your plans.
· You have enough time to reach your goal.
· You understand what obstacles may arise and you know how to cope with them.
By choosing real estate as an asset, you can:
· Save money from inflation;
· Save on rental payments. Instead of renting a room, you can take out a mortgage and become an owner. This idea is suitable for those who do not know how to start investing in real estate from scratch without starting capital;
Provide passive income from renting out real estate;
· To make a profit by reselling the object.
Ready to invest in real estate – where to start?
A novice investor will have to figure out:
· 1. What are the types of investments?
· 2. What profit and in what time frame can you expect?
· 3. What are the objects and how to choose them?
· 4. What are the legal financing schemes (own funds, credit, by buying targeted bonds, making a deposit when buying a home in new buildings, etc.)?
· 5. What risks are important to consider before investing?
Types of real estate investments
Before you start investing in real estate, compare the available investment options:
1. Investment in residential or commercial buildings. Residential real estate usually requires lower costs, which is why most of the novice investors choose it. A more complex and often more expensive option is investments in non-residential properties such as offices, retail, warehouse, hotel complexes and other locations.
2. Types of investments in real estate are distinguished depending on the stage of readiness of the object at the time of the transaction. This can be the purchase of a fully finished premises, or an investment in construction. Having made such a choice, you can count on high incomes, however, the risks when financing unfinished projects are higher.
The easiest option is to buy a finished residential property. When dealing with an object that is being built (especially at the initial stages of construction, for example, at the stage of digging a foundation pit), you need to be prepared for the following risks:
· Freezing of construction;
· Problems with the commissioning of the facility;
· Problems with connecting the building to municipal communication systems.
The purchase of commercial real estate is associated with large amounts of investment and additional costs associated with the maintenance of objects. By investing in retail space, you will most likely have to constantly deal with the property in order to control the tenants and the condition of the premises.
All types of deposits have their own advantages, disadvantages and features. The good thing about real estate is that it can provide a stable income in the form of rent for a long time (at least decades). At the same time, the value of the asset itself increases in the medium and long term. The owner can improve the condition of the object and increase its liquidity. Compared to real estate, securities are a more risky investment option: the risk of a decline in value to zero in the case of real estate is minimal. A large selection of objects and strategies speaks in favor of investing in real estate: choose an asset in any price segment, for various purposes – for living or doing business.
