Investing in real estate can be a very profitable way to grow your assets and help you prepare for your future. For many people, real estate investment provides a generous income that allows them to pursue other projects or indulge in their interests. It can lead to some amazing returns, but as with any form of investment, real estate requires some knowledge and expertise to make it a success.
So how do you know if investing in real estate is for you? Take a look at some of the following considerations to help you decide if you should take the plunge and start investing in real estate.
Get to know the different types of real estate investment
The term ‘real estate investment’ can cover many different areas. Types of real estate investment include:
- Real Estate Investment Trusts (REITs).
- Crowdfunding
- Commercial real estate
- Residential real estate
The most suitable type of real estate investment for you will depend on several factors, including how hands-on you want to be with your investment, such as buying and leasing properties or whether you’d rather have your portfolio managed by a specialist company.
Explore different types of real estate investment to help you decide on the most appropriate route for you.
Understand the risks
Any type of investment carries some risk. While real estate is considered a relatively safe form of investment over a long period, many risks can come with investing in real estate. For landlords, for example, there’s the risk of empty properties, property damage and unpaid rent from tenants.
Whichever investment route you choose to go down, it’s important that you understand all the risks involved. Speaking to other investors can help you learn more about real estate investment, and even avoid some of the pitfalls and problems that have affected those before you.
Are you prepared for all the work that accompanies real estate investment?
If you choose a more hands-on approach to real estate investment, you need to be prepared for what’s involved. There are basic duties that a landlord must fulfil, and this can create added work versus simply growing your investment. Many residential real estate owners give responsibility to property management companies, allowing them to take responsibility for day-to-day issues and handling tenants.
Consider your finances
To be able to invest in real estate, you need to have some initial capital to fund your investment. You may also need to seek additional capital for future investments as you grow your portfolio. You will need to establish if this is feasible, and that you’re comfortable with the level of risk you’re taking. Another option to secure funding is through a hard money lender, which can help you get the money you need for your initial investment, and subsequent investments. Working with a specialist real estate lender will help make the process easier for a faster and smoother transaction.
While there is a lot to consider when investing in real estate, the positives could outweigh the negatives. If you’re thinking about saving for later in life, then investing in property now could be one way to grow your assets ready for a comfortable future. Explore any investments you make in detail to help ensure the decision you make is the right one for you.
