Robert Kiyosaki; the author of the world-famous finance education book Rich Dad-Poor Dad, quotes “Don’t work for money, make it work for you.” Gone are the days when you put in your sweat and blood to earn money. Today, passive income has gained the forefront.
One widely embraced option to let money work for you is investing in real estate. Real estate is less volatile and provides great returns almost every single time. If you hold onto your property for the right duration, there’s nothing that can stop you from receiving the profits of real estate.
The demand for real estate is never-ending since it is a scarce resource and assures profit. However, there is also a chance of your property not getting you the deserved profit. Not every property is alike and remunerative. Then how to ensure the property you invest in doesn’t become a liability instead of an asset?
Here are a few postulates you need to consider if you aim to succeed in real estate-
A] Know Your Market
Knowing what’s happening in the market worldwide will be of negligible use when you invest in property. Get well-acquainted with the local market. Know the factors in your specific area since this will determine your purchase and success.
Avoid hot markets! Sometimes, the investors brag about the outcomes, which might guide you into investing in an incorrect property. The real estate markets keep fluctuating. Look for a market that is in the expansion stage, wherein the property isn’t exorbitant, prices are on a steady rise etc.
B] Location of the Property
Some properties are sold like hotcakes. The location of the property plays a very significant role when investing. Research and comprehend which areas do people desire and compete to live in. The higher the desirability of a place, the higher is the profit gained. Look for a place that has good commuting facilities, great educational institutions, easy access to shopping areas, easily approachable medical care, a safe neighbourhood, leisure parks and areas, and so on. Buyers tend to fall for well-developed and low crime-rate property quite instantly.
C] Buy Low
You cannot expect massive profits on a property you yourself bought at a very extravagant price. Property bought at low costs has the potential to grow and develop and can give a huge boost in profit. However, you have to consider the returns; if the low-cost property is situated at a location that has low chances of development, then avoid going for it. In this regard,a real estate brokerage can help you understand the ins and outs related to the property, and which can bring in more profits.
D] Do Not Overdo Your Property
Buyers most certainly are allured to exquisite property. They surely will be wonderstruck, but will they be able to afford it? When renovating your property, make sure you don’t overdo it. You’re refurbishing to entice potential buyers and not to make the house look luxurious. Keep your intention clear in your mind. Make sure your investment is always less than the returns you’ll get. If you overbuild your property, the buyer count will be limited since only a particular finance group can go for it. You might not get the expected returns either and will spend more than earning.
E] Dealing with Competitors
There are several investors like you offering the same price. How do you stand tall? If you cannot negotiate the price, go for the terms. Offer additional benefits and favourable terms that captivate the buyer.
F] Move Away from the Traditional
Commercial properties are gaining admiration for their high returns and low involvement. Commercial properties include- office buildings, stores, etc. Unlike residential real estate, commercial properties don’t require your active involvement. With residential property, you have to be entirely involved, but with commercial properties, you just have to ensure the businesses that run at your place are authentic and legal. Then, you can sit back, relax, and collect monthly rentals. The rent relies on how well the business thrives.
G] Taxes
Property charges you taxes; be well-versed with these. Make sure you are aware and updated of the latest news about taxes levied on the property. Try and ensure the returns you get off the property are greater than your investment and the taxes you pay.
Perhaps the most notable tax law to be aware of is the 1031 tax-deferred exchange that allows investors to forgo capital gains tax when selling a property and reinvesting that equity into a new one of “like-kind”. These tax laws provide investors with opportunities to retain value and scale their investments.
“Patience is the key to success”; if this quote applies aptly to something, then it’s Real estate. You have to be a very patient person when investing in property. The price of almost every property ought to go up someday; you just have to wait for the right time. Stuff yourself with knowledge; read through the ideas of the best investors; know the rules and regulations that govern real estate, and never overlook Investment < returns. Make sure the yields engulf your expenditure. As Steve Bolton states- The only wrong time to buy property is LATER.
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