Just like with many other investment opportunities, real estate has the potential to be very profitable for investing in properties. There is a lot of the number of options you can explore that will determine how successful you are in the market. These range from those that offer minimal exposure and a lot of safety to those that often require a significant amount of due diligence and research for success.
investment opportunities For real estate
The two major options–the private market and the public market. Both have their peculiarities, as well as their pros and cons.
* Private Market:
The private market offers you direct exposure and involves buying an interest in a property. In this case, you could purchase and manage a property yourself, or you could employ a property manager. However, you choose to manage the property, you would be liable to profit from the property, either by collecting rent or through the property’s appreciation. Rent is a particularly significant source of cash flow, especially for apartment building owners. One way to increase the amount you charge for rent is to improve the building by performing renovations.
Another way you could participate in the private market is if instead of buying a piece of property, you joined a pool or syndicate to buy the building. In this case, all the members of the syndicate would pool their resources together to make it significant enough to make the purchase. As a part of a syndicate, the risk of the purchase is reduced, as it’s shared among all the members, but so is the profit.
The private market is the more common method of investing in buildings and properties, and it comes with some of the following risks.
- No occupancy/no profit: In the case of owning an apartment building, you only make a profit when a tenant moves in.
- Market downturn: If the market goes down, so does the value of your property, which then means you lose money.
- Maintenance: As the owner of the property, you’re directly or indirectly responsible for the maintenance of the building. This can turn into a significant cause for concern in situations where the rooms are unrented.
* The Public Market:
Investing in the public market, on the other hand. Involves buying shares in a publicly traded company that specialized in properties and landed assets. These companies own properties on behalf of their shareholders, and buying shares or units makes you one of those shareholders. Here, your exposure and involvement are indirect.
Also, unlike with the private market, investing in the public market generates income differently. The publicly traded companies either pay dividends or distribute the rent collected from their properties among their shareholders. Like all publicly traded companies, any increase or decrease in the company’s asset profile is reflected in their share price.
The private and public markets have their advantages and disadvantages. Choosing where to invest basically depends on some of the following:
- The capital you have for how much
- How long you will hold the property for
- How involved you intend to be in the maintenance of the property
- Your risk and exposure tolerance
But then, with your due diligence and careful consideration of your options, investing in properties can be quite profitable.
Real Estate Investment Lies Demystified
Real estate is a very lucrative area to invest in, and this is why most people see this as the pinnacle of their lives. However, real estate has its technicalities, and it is hard to understand them if you are not involved. Neutrals on the outside think that once you have property, everything will flow smoothly and this does not have to be the case. Real estate has its good and bad sides that may be unknown to you and this article will try to lay out some of the most common real estates lies you will hear today and tell you the correct thing. Read on and find out some expert advice from the folks at 3cre;
* Real Estate Investment Is Risky:
Let’s face it, all investments in this world carry some degree of risk, and no one should lie to you that there is a full risk-free investment. However, the claim that real estate is extremely risk is a myth, and to some extent, this can be supported by delayed projects, stagnant demand, and fluctuating prices. However, these risk factors are insignificant when compared to other volatile investments such as stock trading. When you look at them, you will realize how real estate is stable and ranks lowly on the list of risky investments. Real estate property can live up to its potential when you look at it in the long-term perspective, and there is a lesser chance of incurring risks in such investments. Short term ventures that promise to get you lots of money are the riskiest ones. When investing in real estate, the best thing to do is to take calculated risks and be realistic about your investment. Do not expect to get the returns right away and you will reduce your risks significantly.
* Get Profits Forever:
While real estate is a relatively stable place to invest in, the other side of the coin has people believing that you will continue reaping profits. For now, this can be true, but that has been seen with many other investments that were thought to be attractive until they became saturated. The property seems to appreciate over time, but after some time, this will end. Thinking that you will get unlimited profit is a lie that can misguide you. The market will eventually get saturated as more people invest in this area and the prices will stop rising. Aside from that, we have seen cases where the real estate prices are fluctuating and prices falling due to reduced demand.
* Starting A Profession In Real Estate Will Make You Rich Fast:
You can look at all the fancy real estate personalities and think that starting your career in this area is a quick way to get rich. You will be disappointed when you do it since most of these people started from somewhere and scaled up to the levels they are today. When you become a real estate agent, you should understand the task at hand and know that it means putting your client requirements ahead of yours if you need to gain a reputation as a good agent. This can be challenging especially if you are in it for the financial rewards and you could get disappointed. When you decide to launch your career in real estate, understand that you will be required to work extra hard to become rich and it can take a lot of time.
* The Industry Is All About Buildings:
Most people think that when it comes to real estate, the industry is all about buildings and rental property. Well, this is not true as real estate offers massive opportunities to people of varying professions. There are opportunities for those in services, technology and hospitality industry as all these things are connected in some way. All these things are evolving rapidly, and the rise of the internet has promised to converge all these services seamlessly.
* Getting Clients Is Straightforward:
When someone invests in rental property, they look at how the flats and apartments are full and imagine how clients will come flocking once they have developed their investment. Well, this is a lie as finding clients is the most difficult part of this job. Real estate agents work extra hard to get clients for homes and rental property as they need to convince the clients why they should select them and not all the other options available to them. It is common to see people developing malls that are thought to be the highlight of cities and towns only for them to find that people are not utterly enthusiastic about the place when it is finally developed. Client search and retention is tough, and you might have to spend some money to keep your property generating at its potential.
* You Can Become An Expert Overnight:
People look at real estate and the work done by agents and think that they are just normal brokers. Well, things look easy from the outside, but that is not the case. These people underwent some training before venturing in the real estate turf, and their expertise makes them perfectly suited for the job. When you venture into it with little or no training, you could find yourself failing miserably. Whether you are an investor, property manager or realtor, you will need to hold the qualifications and understand how things work before you can succeed in this turf.
* All Agents Are The Same:
Most people who want to buy and sell property resort to agents and some make a mistake of picking on any agent with the notion that all of them are equal. Like it is in all professions, there are those experts that are committed to excellence and those that are quacks who want to rob you of your hard-earned money. Take your time when looking for a real estate agent and do some digging to check their record and prove that they are the right option for you.
Do not be misled by the claims out there concerning real estate and always stick to the facts. This way you will be better placed to venture into this field regardless of how you want to do it and eventually succeed.