For first-time real estate investors, there are various things to take into consideration when taking steps in real estate investing. Investing in real estate has over time proven to be a safer investment option, unlike stocks. You can never really predict the stock market but with your land, it’s sure to appreciate over time.
There are various real estate investors who have earned fortunes but this doesn’t mean investing in real estate is risk-free. Like any other business, real estate has its own risks associated with it. You can generate huge returns and can as well lose a considerable amount of money.
It is important to know where and what you are doing before you consider venturing into any investment option and as with real estate, here are a few of the major things to consider:
- Know your investment goal:
Goals are specific, Goals drive you, Goals are what directs your path.
Every business should have a goal and real estate investing should not be left out. Set your goals to be as specific as it can be. Owing to the low liquidity and high-value investment in real estate, a lack of clarity may lead to unexpected results, including financial distress.
Do you want to invest for the short term or the long term? Are you a short term investor or a long term investor? Investing in Rental income is best for cash flow and near long term; Land banking is best for the longer term.
- Know your budget:
Whether you’re new to real estate investing or going on your third investment, knowing your budget is very important. Before you decide on what your budget for the land is, you must first factor in every other important thing that you are financially committed to. When venturing into any type of investing it is advisable to draw from your investment account/fund (don’t spend all your money).
For instance, with a budget of N1 million, you are sure of how much you are willing to spend on the acquisition of the land and what you would be searching for would be tailor-made to your budget.
Almost every successful business owes that success to careful planning and budgeting.
- Where you’re investing:
One of the most important thing, if not the most important to consider when investing in real estate is the location choice.The first thing you need if not the most important when considering investing in real estate properties is the choice of location. The location of your property determines if you would make a profit or loss and this could mar or make your investment. It must be a location with a foreseeable appreciation or good rental value.
Think location first, and the property itself second. It might seem backwards, after all, it’s the physical structure that you’re actually buying but the “right” property in the wrong location isn’t likely to be the right property at all.
- Who you’re investing with:
Real estate like any other business has its risks. You need a company you can trust when investing in property to guide you and help make the best out of your investment. It must be a credible company, one with a long-term vision.
Real estate investment can be very rewarding and a lot of people have made a fortune from it. However there are risks, the elements above are the ones which you should actively consider. They can make the difference between a few thousand in returns or billions.
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