An intelligent investment choice is an ideal way to secure your future with potential returns. However, only a few investors are aware of the right type of investment choices that persist in the market.
One of the most underrated investment choices is the real estate industry. However, understanding the real estate market can be arduous, especially for beginners. Although, investors are aware of the profits & returns that the real estate industry holds, but only a few are well-versed in the industry to calculate risks & make fair choices.
In this article, we will walk through an in-depth guide for a beginner to map the real estate journey.
Understanding the real estate market may seem strenuous, but one may find investing easy without any backfires if understood clearly with the below 6 points.
- Understand your Goals
The first and foremost point to understand is a clear goal as to why you wish to invest in the real estate industry. Usually, real estate investments harbour numerous benefits, mainly passive income & assured returns.
But, if your goal is a secondary source of income, then look for a property that offers steady rentals. This task can further be bifurcated to give you a clear vision of your goals with the SMART [Smart, Measurable, Achievable, Realistic, Time-bound] formula.
Implement the SMART formula by asking yourself these questions;
- Is it specific?
- Is it measurable?
- Is it achievable?
- Is it realistic?
- Is it time-bound?
Once you answer these questions, proceed to figure out the answers of the following questions in regard to the real estate investment to get a clear-cut idea before moving ahead.
- What type of property I wish to invest in?
- How much finances can I pool in?
- Where can I buy the property?
- When do I buy the property?
- What are the plans after I invest in a property?
- Market Research
Once you are ready with your goal, begin excavating the real estate market via real estate agents, previous homebuyers, and online resources. Get an in-depth knowledge of your neighbourhood’s real estate sales trends or the location you prefer to invest in.
The better the market research, the better the investment decision. Hence, it is one of the crucial factors in the real investment journey for beginners.
- Identifying the Right Properties
There are two types of real estate investment for beginners Residential & Commercial. As the name suggests, both types of investments cater to a specific market segment. For those seeking residential real estate investment, a host of factors come into a frame that must be scrutinized before landing L any decision.
For any investment, the property’s location plays a significant role in deriving whether the property will receive steady appreciation rates & returns. You can calculate the probable ROI [Return On Investment] by looking at the sales in a particular region, calculating the CAP rate, and estimating the NOI [Net Operating Income].
- Finance
Finance, a significant factor when opting for investment, can put you in a situation of worry. Nevertheless, there are multiple sources of finance in the market, one of the top ways being a mortgage. Most banks offer mortgages, but you can also pool finances from any real estate investment agency or financial institution.
- Management Plans
Another important factor while investing in property is a concrete management plan, outlining objectives & goals as an investor to help you track everything.
This management plan is prepared such that no aspect of the real estate investment remains untouched. The plan should cover the entire process, from acquiring the property, maintaining it, and further selling it for profit. Besides this, a contingency plan has to be ready in the course of any unforeseen circumstances.
- Risk Mitigation
Investing in the real estate industry might bring an array of benefits to the table. However, forecasting risks must be taken into account. Risk mitigation is yet another prominent point to be explored. There are a few options to help with risk mitigation.
One of the many is diversification. The investment risk is scattered across different sources if the investment portfolio is diverse.
Another way to mitigate risks is to take immense care while scanning & researching the real estate market. One mistake here & it can end up in an unseen state of affairs.
The last option is to collaborate with a team of professionals. Several companies offer end-to-end support in real estate sales, as they know the market nuances.
Conclusion
Investing in property demands extreme research work, commitment, and patience to yield long-term returns. Real estate properties tend to accumulate generous cash flow & consistent appreciation over time.
Nonetheless, real estate investments are associated with risks, but following the above guidelines may result in fruitful outcomes. For someone looking for a professional, end-to-end real estate PropTech solution, BeyondWalls is one organization that deals in real estate marketing & sales.
