Smart Way to Invest in Real Estate
Most often, when deciding in invest in real estate properties, people generally consult a real-estate professional or an investment expert, people who will entice you with the financial jargons-the predictions and assumptions to motivate you into investing- almost like throwing the dice and expecting a favorable result. However, is the information you receive from these agents, reliable?
Heavy reliance on readily available media news to gauge the real-estate market can be a disaster. Most media outlets like newspapers, television and realty websites are not responsible for the information that they circulate and are quick to change their opinions and predictions depending on the status of the markets. It’s always prudent to analyze on your own and make prudent decisions depending on the local market conditions. Understand that the market has a mind of its own- will it grow in your favor? Find an answer to this important question before jumping in.
When investing, the majority of the ground-work and information collection can be accomplished by you. Use your common sense, treat the property investment market as a critic and make decisions based on Cash Flow Return (Rental Income) and Future ROI (housing sale profit). Keep a steady eye on the BSE Realty Index and other similar trends. Being aware of the recent global market crashes and being wise enough to understand its possible impact on your investment are necessary information alongside the sober thought that in general, long-term success is not ‘a walk in the park’ anymore for small investors.
When formulating the expected returns pattern, the past returns data need to be considered as reference with a pinch of salt. When drawing return expectations while utilizing past performance of housing investments as inputs, those portfolios that performed particularly well in the past show up as results. However, when the ‘experienced’ beliefs of a investment expert are used as input- the output generally are better or worse portfolios. A good realty investment expert will constantly evaluate the investment planning outcomes in the face of evolving alternative economic situations (like slowing economy, falling prices etc) and will suggest a margin of safety in saving and investing your money.
For a large section of our society, purchasing a home is the single largest investment they will ever make. There are other types of real estate investments worth investing by an individual like smaller apartment buildings, duplexes or even single family homes or condominiums that can be rented out to tenants. This type of investment is much more real and personal as unlike most stock investments, you can see and touch your house- there is the pride of ownership.
Some of the fundamental advantages of realty investments are diversification value; yield enhancement, inflation hedging, ability to influence performance, etc. An investor can play an active role in increasing the value of his/her investment…painting the house, fixing problems with house plumbing or leakages, leasing out at high rent to tenants etc. Truly, the basic thing required to accomplish all this is good foresight, common sense and belief in your self-judgment. The speculators and critics need to just remain a background voice that can be switched off whenever it becomes a distraction.