In recent years, investing in the real estate business has become an increasing “trend.” In other terms, it is property, usually with private ownership, which consists of land or buildings. Real estate business, in this case, is the buying and selling of those lands and buildings. There are three types of real estate which can become a business; residential, commercial, or industrial. Residential real estate, which comes from the term ‘reside’ consists of family homes such as townhouses, duplexes, apartments, and others of the sort. Commercial real estate is any shopping center or mall, educational and medical buildings, offices/office buildings, and hotels. Finally, industrial real estate includes factories or other ‘manufacturing’ buildings and warehouses. Each of these can produce an income in some way or another; homes can be rented, shopping centers and hospitals generate money of their own, and warehouses too can be rented or outsourced. Regardless of which type you would like to invest in, or why you would like to invest in them, there are five points which you must consider before you start investing.
Real estate business needs lots of research
First of all, before taking any step or taking any action, you must do your research. You must consider how the market you want to invest in is like. Is there a demanding market for it currently, or is the general economy at an all-time low? You must track housing prices in the area for a while to see if their prices go up or down, or if they are even purchased or rented. With investments, if the economy is at an all-time low, this may be in your favor when you are looking to purchase. You can become a homeowner at a very low price and sell it when the market increases again. The number one mistake with real estate is rushing into purchasing a property for more than it costs, or right before its price decreases, only to sell it later at a much lower price. Unlike cars and smartphones, the price of properties should not depreciate; in fact, in some cases, they appreciate two times the original value over time.
The second thing you need to research is the location. Are you purchasing on land that is currently surrounded by a desert? Are you purchasing in an area that is too remote? You need to purchase a property that will be appealing to clients that you have in mind, rather than your own personal feelings towards the location.
Your income must be stable
Before you make any large purchase in general, your income must be stable. Making large purchases takes a toll on your savings, so you should have a steady income that can handle this type of investment. If a crisis occurs, however; crowdfunding can also be an option. According to this Fundrise review, crowdfunding is a term used to describe the idea of raising capital on one’s project by having investors invest their money and split profits accordingly. It’s basically a pool of investment among many people, whether you join in with friends or with professional development companies that can guide you.
Consider your goals
What are your goals with this property? Is it a secondary home that you are going to be renting? Is it a place where you yourself are going to live? Is it commercial real estate building that you will be turning into a mall or hospital? These are all questions you must consider before you purchase real estate since it falls back on location. If you are building a mall, then you must make sure it is close to where the residential homes are, and vice versa if you are purchasing a residential home.
Consider your situation at the moment
Consider your current status at the moment. Are you married? Are you expecting children? Are you single? These are all life situations that can change either quickly or over time, so make sure that you are purchasing a property that can endure these types of changes. You need to be sure you’ll be able to handle this investment along with whatever kind of life changes may come your way.
Consider other options
Last but not least, consider your options. You do not have to have the largest savings account around to purchase a home or a factory. One umbrella option is to consider getting an investment loan. There are different types of loans and different types of needs for those different loans, therefore you should also conduct research on those loans and make sure you will be able to pay your debts and earn money at the same time, after all, that is what investment is for.
Keep in mind that, like other investment options, real estate can have a downside as well. When you need to sell the most, the economy may not be on your side, or you may sell at a point that is too late – also known as asset bubbles. So before you make any decision, you must make sure of your goals and your current income as well as conduct proper research on the location itself and the current economic situation so that you are always on the safe side.