Tips to Keep in Mind While Investing in Real Estate

Investment is a quite a complex decision and most of the times we are confused about the right avenues of investment. However, taking into consideration the present market scenario, investment in real estate is considered a lucrative deal. It is true that real estate investment has a lot of opportunities for big gains but at the same time investing in a real estate is a lot more complex than investing in stocks and bonds. Hence, before venturing out in the real estate market one need to weigh the pros and cons and also should have a hawk’s eye on even the smallest of aspect that might have an impact on your real estate investment.

Types of Real Estate Investment

• Rental Real Estate Investment: In this mode of investment, a person buys a property and rents it out for the purpose of investment. In such an arrangement ideally the landlord is responsible for the taxes and costs of maintaining the property. But the good thing is that the rent amount charged is high enough to cover all these property maintenance costs. Landlords might opt to charge even more to make monthly profits but that is not the right approach. Rather, the rent should be such that it is enough to pay the mortgages because once the mortgage is paid off the rent is converted to a profit. At the same time, the value of the property also appreciates in the consecutive years.

• Residential Real Estate Investment: These are kind of real estate investment that involves real estate that is associated with real estate in which families or individuals live.
• Commercial Real Estate Investment: This particular kind of real estate investment investing in office buildings.
• Industrial Real Estate investment: The kind of properties that come under the purview of industrial real estate include warehouses, and distribution centers, storage units, manufacturing facilities, and also assembly plants.
• Retail Real Estate Investment: Retail real estate investment on the other hand involves retail properties like shopping malls, shopping centers, strip malls, and so on. Retail real investment can also be in the form of rental properties. These include restaurants, hair salons, shops, and so on. In such kind of investments the tenant tries to give a percentage of the retail sales to the landlord so that the retail property can be made more attractive.

Why make investment in real estate?

One might ponder over the question as in why to invest in real estate. The reasons are many:

• First of all, investment made on real estate gives a higher return
• Real estate market has a low volatility when compared to equities and bonds
• Real estate investment has a diversification potential. This means that real estate has a low and sometimes even negative correlation with various other asset classes. For example, when stocks are down, the real estate market is usually high.

Last but not the least, be a wise investor in the real estate market and keep at bay chances of making phenomenal losses.

Originally Published at InvestmentRealEstate.biz