When to invest in real estate
Investing in real estate comes with risk. With risk comes immense reward, though.
When you think about real estate investments, it can sometimes feel daunting because it is work. It isn’t just putting money toward the home or property; there are other business activities or efforts required to convert your home or property into a worthwhile investment. There are different forms of investing.
You can invest in a home to then have it as a rental property. This means the tenants will pay rent in exchange for living in the house and receiving specific amenities like home maintenance support. You can also invest in land. This is typically when you buy what they call a “green field,” and the land is not yet developed. You can then be an investor in the actual development equipping the land with the necessary building infrastructure, or you can keep the land and sell it to a developer. Typically if you are going to do the buying of a greenfield and plan to parcel it off to builders, this is the activity of a developer. Therefore, there are vast opportunities when investing in land.
These investments are above and beyond your individual needs because you are not living on the land or on the property. Therefore you will need enough money to cover the expenses and the work related to these investments. Suppose you want to rent your property for example but want to do those activities with others. In that case, we recommend consulting property management groups to understand the expense associated with their services. If you’re going to develop the land, take a larger lens to the project and build a budget to know how much money you need above the purchasing transaction to keep the investment operational. Consulting the local government entity where the land resides is a good start!
In other words, we recommend getting a good understanding of your financial positioning before you begin investing. This way you can make sure that you generate the profits you hope to achieve.
Did you know that when you buy a home, that is an investment?
When you purchase a home, it will typically generate more value than what you paid for it. This means that the home is like a savings account. Each dollar you put toward your mortgage goes toward the equity of your home. This is one reason home ownership is a profound opportunity for anyone. Listen as RE/MAX Capitol Properties REALTOR, Kevin True, shares his thoughts on the excellent benefits of real estate investing and homeownership in his video.