Real estate investment tips from an expert
Posted on August 31, 2019 as a contributing article by Gary Granger to The Grand Rapids Business Journal
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Real estate has often been referred to as a good and stable market for investors. It offers steady growth and on average, a higher return than stocks, bonds or mutual funds. Though it seems like a no-brainer for turning a pretty penny, there are many factors to consider before jumping into the game. If you’re looking to invest in real estate, check out these tips for investing in the market.
Diversify your investments
Don’t put all your eggs in one basket. Just like any other form of investment, it’s best practice to diversify as a way to safeguard against the ever-changing market. You’re much better off to have 10 $1 million investments than to have one $10 million investment. Similarly, let’s say you were to heavily invest in student housing in a college town. You were profitable for a few years, and as a result you decided to invest in more property near campus. At this point, all of your eggs are in a singular basket of student housing. While the investment was steady for a period of time, by choosing to expand within the singular sector, you lack diversity and as a result have put yourself at greater risk when or if the market fluctuates. Thus, we recommend breaking up your investments, which can help increase financially security, and ensure you won’t lose it all if the market shifts.
Make sure it’s the right fit
Diversifying your investments is important, but so is choosing a venture with a realistic scope and development plan. Many invest in real estate with the wrong mindset. They try to produce quantity rather than quality and end up calling it quits without a profit to show for it. Be smart with your venture and choose to invest in something that will be sustainable in the long run. Before settling on an investment, ask yourself questions, is this model attainable? Am I passionate enough to see it succeed? Is the projected revenue stream realistic? If each can be answered positively, it may be the right investment. If not, step back and take a second look. The key to real estate is producing a quality structure, filling it and waiting for the right offer.
It’s about the long run
Saying no to an investment opportunity is okay and sometimes the wisest option. So if you are looking for a quick profit, investing in real estate might not be for you. Don’t be hasty and rush into the market just because you think it will produce short term profit. If done right, meaning the venture is a good fit, sustainable and is well researched, it can produce a substantial profit over a long period of time. Traditionally, real estate is a slow and stable market, which provides long term growth and return, but only if the investment is of quality. So be patient and do your research before making any decisions. The more you know, the better chance you have of securing a long-term investment that will yield dividends.