By Rishabh Siroya, Founder Legend Siroya, President-Elect Naredco NextGen,
Are you looking to invest in real estate? Trying to pave way for extra income and striving to build long-term wealth?
Well, while realty offers a varied range of options for financial investment and an array of forms of projects with assured returns, there is no degree or course that can educate you about the prerequisites of profitable real estate investing.
The best way to grasp the art of moneymaking through real estate is to learn from the industry moguls. And after much research we can safely say the first rule of investment in real estate is to make a plan, do your ground work well and lay a strong foundation. It is often said that consider real estate investing a business. By doing so, one would always keep in mind that alike other businesses; realty investment also requires focused preparation, implementation and administration. Just like most fruitful businesses are managed by trained people at every level, investment in real estate too require expertise.
Even though investing in realty can be management-intensive, it is advised to learn the knack before relying on an advisor. Many a times, paid advisors like brokers or wealth managers offer a generalistic point of view without paying attention to the specific consumers’ need and priorities. So, it is advisable to draft your plan as per your requirements and steer on your own.
The second most important point is to attain a decent knowledge about the market where you have decided to put your money. Every market has specific characteristics of its own, with it follows the investment opportunities. For example, your local market might not be very profitable for rentals but it could be good for flipping and capital appreciation. So it’s best to find out the nature of the market, the neighbourhood and surrounding pros and cons. Like emerging neighbourhoods offer great potential and lucrative incentives for investors. Recent data suggests that investors who purchase properties in emerging neighbourhoods make the most profit on their investment..
Another important point to keep in mind while investing in real estate is to ‘never over-leverage’. It is important to make all calculations beforehand because it is possible that you may be successful for a long time but still suffer monetary loss if the mortgage is too high. Many investors believe in the thumb rule of setting 50% of your budget aside, even more so if you are new to realty investment. So, it is prudent to keep some investment financed so that you can enjoy a good blend of safety while enhancing your resources and assets.
While people often dream of big investments as they yield more profit, one must rely on the numbers of the inflow to finally decide on the property to invest. It is better to start from a smaller apartment and grow into bigger projects than signing up for a much bigger project and falling back on the payments. One must learn how to make sure the investment has positive cash flow. This can be ascertained if after paying the EMIs, you still have positive cash flow. Then you can reap the tax benefits without hampering your day-to-day lifestyle.
Last but not the least; one must always keep multiple exit strategies. If you are just starting out and do not have excess capital, you must diversify your investment into different properties of smaller budgets to mitigate the risk factors. So, despite all the haze around real estate investment it is one of the best ways to create wealth while growing your assets and building new ones.