Investing In Real Estate
There are several ways to invest in real estate; the most common ways are through "buy to rent", "buy to renovate and sell", and speculation in a particular development which is pre-selling. Just like any business though, investing strategies play a major role in real estate investment as well. One of the strategies that may reap high profits is the Increase-Value strategy. Through Increase-value, investors purchase real estate that is at least 20% below the current market value. This then would allow the investor to be flexible in coming up with a good margin in the selling or rental price.
Another strategy that can be used is whereby investors buy properties that have potential for increasing its value through ‘face lifts’ ,i.e: where just a lick of paint can magically transform the look and feel of a place- as opposed to major renovation work- which can be somewhat of a bottomless pit!
Aside from these basic strategies, it is important to have an exit strategy or contingency plan in case the value of the property depreciates or falls for some unexpected reason. Exit strategies should be done before any purchase, if it involves the structuring of a mortgage plan.
Investing in Real Estate also involves risks which can be affected by several outside factors. Sometimes people can be lulled by agents into a false sense of security that prices will somehow rise ad infinitum, no matter what. This of course is nonsense- just as when you are investing in stocks, if the US economy was to take a turn for the worse and interest rates were to rise, property prices would certainly fall and be less liquid.
To coin a cliché, the golden rule of real estate investment? Location,location, location!
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