While real estate appears as a lucrative opportunity for investment, there are many challenges. This is true especially during the Coronavirus pandemic, where most investments appear to be seriously falling behind. For example, traditional sectors like stocks, bonds and others have experienced a serious downward trend.
As an area of opportunity, real estate is not an easy place to become successful. This is because the capital investment costs make it untenable for many small investors to become a part of the industry.
In this article, we are going to look at five important factors people need to take into consideration before investing in real estate. However, before we look at the list of factors, let us try to understand real estate as an industry and as an investment opportunity.
Real Estate: What you need to know
Real estate means a part or parcel of land, which might be vacant or has some structure built over it. It also includes the right to control the land, sell it, construct any structure on it, or dispose it in any which way possible, legally permissible by law.
For a very long time, the growth in the real estate industry has always seen a slow to moderate growth. This has been accelerated in countries, which experienced better growth in their economies. For a very long time, the real estate industry was considered as the safest place to make investments.
However, speculations and the uncertain nature of global financial crashes (2001, 2008 and 2020) have created a lot of problems for the industry. The pandemic has necessitated a change in the investment strategy of investors looking towards real estate.
List of 5 Important Factors for Real Estate Investing
Location
According to cardone capital review, location is one of the most important factors to take into consideration when investing in real estate. Understanding the potential of an area, paying attention to issues like metro transport, schools and markets in the vicinity are some important considerations you need to factor in, while making real estate investments.
Valuation
While valuation is something, which is subjective in nature, it is always a good idea to ask an established financial institution. A valuation expert assesses the property and assigns a defined value. Revenue and land departments of governments do the same as they have to fix taxes for the same. Going for a high value property will result in higher growths in the near future.
Long-Term Opportunities
According to experts, the pandemic has resulted in a changed investment strategy in real estate. Short-term selling needs to be abandoned for long-term gains. This will help in ensuring stability of the investment and ensure security for the same. As an investor, it is important to think about investing in the real estate sector only for a long-term basis.
Financial Exposure
Investing in real estate is not something, which small investors would be willing to make during the pandemic. This is because the need of the hour is to limit the kind of financial exposure and share the risks with banks and lending institutions. It is never a safe bet to place all your investments without sharing the collaterals with a banking partner.
Prioritize New Properties
Many experts point out that new properties offer better prospects for growth in the real estate industry. This is because investors are looking to cut down on additional maintenance costs, which come with older properties. Investors just want to pay on properties, which have been completed just before the pandemic began.
The Final Word
Real estate is a very useful investment area, because once the economy bounces back, the sector is going to pick up in a major way. While some investors suggest that avoiding real estate during the pandemic is a sound decision, others point out that this is the best time to invest as property prices are low and banks are more willing to lend easily.
