Real estate investment historically is even more profitable than equities. However, this type of investment requires more capital in most of its forms or intelligent indebtedness in other cases.
First of all, let’s see what is not investing in real estate.
It is not buying a house through mortgage hoping that the price of the property will rise. However, it is possible that the property can be rented for a monthly rent higher than the payment of the mortgage. This type of investment can be risky because you acquired a debt in a non-liquid asset.
However, in a market that does not inflate, a business opportunity has arisen around the investment in parking spaces. As you have seen, practically all cities are having more and more parking problems. The growing demand for parking space causes an increase in the price of parking spaces. If the trend will continue, investment in garages promises to be very profitable for the coming years.
Different kinds of real estate investment
Investment in residential real estate
Properties like apartments, houses, townhouses, or apartment buildings, where there is a possibility to acquire tenants.
Investment in land
During the recent bubble, a lot has been able to make millions with this type of investment. Often it consisted of investing in a rural area. With a good amount of luck and the area became urbanized, that means huge profit. Another strategy is to buy a large expanse of land and sell it in parts. In real estate, the value of the division makes it possible to earn more money.
Investment in commercial properties
Examples are office buildings and commercial premises. Purchase of business building can be more likely be financed by a bank. That’s because the idea is to rent the different offices to other companies or business.
Investing in malls and shopping areas
Investing in this type of property requires a lot of capital. And there is a bubble of shopping centers in most cities. A mall in an excellent location can be rented for shops, coffee shops, cinema and large food chains.
Being so lucrative, it caused many other entrepreneurs to venture into this business. This saturation caused too much shopping centers and spaces for rent. You might have seen some shopping centers with too many vacant spaces. And those growing areas are closing now. This vacancy shows that they probably are not making the money they should.
Investments in industrial real estate
A common example of this investment is industrial warehouses for various type of goods. Another usual investment is a piece of land that will be an industrial area.
Mixed investment in real estate
This type is for the real billionaires because this investment is practically a combination of all of the above. A popular example is the Dubai project. This investment involves constructing an entire complex that will incorporate the largest shopping center in the world.
When you invest in real estate, borrowing money is not bad as long as you have drawn up a plan that covers all risks imaginable. One of the ways to do that is to get a title insurance to protect your property in case of a title defect. The truth is most real estate projects is a joint venture. However, you must bear in mind that there is a possibility that the project will not go based on the plan and you end up in debt.
Real estate investors do not put their investments in their name. What they do is, if they buy three office buildings, they create three various companies. They will create one company for each building. This way, a business can endorse multiple projects. Also, in case of legal action, the court can only take one property, This will save the rest of your buildings.
Any big investor will recommend you this strategy. The most important factor in the real estate market is the proper timing