With the risk on non-real estate related investments being pretty high, especially if you are buying instruments rather than actual assets it may be time to put your money in property. Of course, it’s a little more complicated than just rocking up and buying a place. In fact, there are many different ways that you can invest in real estate and at a variety of different price points. With that in mind read on to find out more about each option, and to decide which one suits the budget you are working with the best and will be the most profitable.
Buy to lease
The first option to consider is buying a property to lease out. This choice is one that many people that are in the beginning stages of investing in real estate go for because it is relatively simple and provides a good return.
It is also an option that requires the least amount of capital upfront, as all you need is the outright cost of the house, or a mortgage agreed to cover the value. Although, it is worth bearing in mind that you will need to secure a buy to let mortgage which is different from one on a home that you plan to reside in yourself, and the same goes for you insurances as well.
Now, there are several ways to maximize the return you can achieve with this type of investment. The first is to buy property cheaply from an auction, or one that needs some work to bring it up to a habitable standard. Of course, the most important thing here is to ensure that you don’t get into a money pit situation, where the amount and cost of the work needed vastly outweighs what you can make on the property itself.
With that in mind, it’s vital that you pick buildings that you have seen, and had surveyed, and that need purely cosmetic work rather than any serious renovations. In fact, this point is also crucial because detailed work can take a lot longer to complete especially if it includes construction, and this can severely delay the timescale of your project and cost you in profits too.
The next option for putting your money in property is house flipping. This choice is a method of property investment that has been popularized by shows like the one below. It often costs more than leasing because additional funds are needed for the homes to be developed to a high standard in order for them to sell for a reasonable profit.
However, it is wise to recognize that, even if you have watched every show on this topic it’s a lot different than rolling up your sleeves and doing the grunt work yourself. In fact, it can be a significant advantage both financially and effort wise if you have previous experience in construction, or in the very least excellent contacts with those in the industry. Something that will ensure you get the best deals on materials and labor and help you maximize your profits at sale.
Additional ways to maximize profit include picking run-down homes in very popular areas. These may be a little bit more expensive, to begin with, but the percentage that you can make on your original investment is much larger because of the increased demand for them.
The next option that those thinking of putting their money in property should consider in commercial buildings like factories, office spaces, and even restaurants.
Investing in commercial property is often less popular two reasons. The first is that it often takes a greater sum of money to get going in this area. The second is that those starting out in real estate investment think they have to be a business expert to make a go of it.
However, this isn’t always the case. In fact, as with all investment choices, it often comes down to whether you will be able to create a larger return on the money you put in, or not.
To maximize profits in the area of commercial investment, it can be helpful to use a broker knowledgeable in this area that can advise you on pitfall and potential returns. Also don’t be afraid to consider more non-traditional types of commercial property such as buying a space in popular areas to rent out for pop up shops. With another alternative being offering short-term flexible working spaces for the startup generation as these can all be profitable ways of investing in commercial real estate.
Another option that those looking to invest in real estate should consider is property development. This is a project that usually takes a large investment as you will be funding the build of a property from scratch. Although, it is also possible to join with others in a consortium to do this. An action that will allow you to put a smaller share in, but still benefit from the higher return rate.
Now, some folks that invest in property developing are ones that have experience and expertise in the trade and decide to do the project management themselves. Of course, this is not for the faint-hearted because it is a complex and at time stressful job.
In fact, the property manager (PM) is something like a conductor ensuring that everyone in the orchestra is in the right seat and that they hit the right note at exactly the correct time.
PMs can expect to fulfill tasks such a planning a detailed schedule of works that shows when different construction groups need to be on site and what they need to complete by certain deadlines.
They also have to deal with a myriad of other things like finding a heavy lift crane for hire for the construction phase of the work, as well as submitting and negotiating planning permission, and sourcing materials that are cost-effective and fit the design spec.
The latter being something that isn’t always easy, especially if they are looking for a specific high-end finish or eco-friendly solution that is not produced in the country where they are building the property.
In fact, whether you choose to take on the role of PM, or employ someone else to do it for you, this role is essential to maximizing any profits you will see from this type of investment. The reason for this is that because without a good PM your project is likely to go over time and budget. Both things which eat into any profits you will earn by selling or leasing the building you have built once it is complete.
Hotels and accommodation
Another specific area of property investment that is worth mentioning is putting your money into hotels and other forms of accommodation like, villas to rent, campsites, hostels, B&Bs and holiday parks. Depending on the size of the development you are looking to invest in this can be a fairly low-cost way to invest in real estate.
There is good potential for returns as well because vacation accommodation is always charged at a premium. Something that means even if you don’t have full residency during peak time you can expect a good return on your money.
Now, to make this sort of investment as profitable as possible you need to choose wisely. The location in which it sits, closely followed the standard of finish in the property are essential. The reason for this is because it is these factors that will tempt in guests and make you money in the long term. To that end, always try and get lots that are close to popular attractions as vacationers love convenience.
Lastly, it is also worth thinking about putting your money in property on the overseas market. Again, the cost of this will depend on the type, size and use of the building you invest in, as well as in this case the strength of your home currency against the country in which the building is situated.
In fact, to maximize profits, it can be useful to restrict your search to countries where the native currency is weak compared to yours, but you expect it to equal out or go the other way in the medium to long-term. The reason being that this will allow you to resell you invest and make a tidy profit.
Also, when investing abroad don’t forget that you will need to find a reliable agent to deal with in the country of your choice. Be sure to pick one that can communicate in the language you speak, and that can make you aware of any differences between the way things are done in your home country and theirs regarding buying, leasing and investing in property. This point is so vital as by doing so you can ensure that you don’t waste any of your precious funds and maximize the profit on this sort of investment.