It is an established fact that real estate is highly lucrative and profitable. Yet so many people run away from it due to some disastrous experience they had or heard of. The investment may be too huge to lose. That is why it is important to be fully updated on what you are getting into. Knowing the nitty-gritty before delving into it is a nice idea. Realtors are making several millions daily, some make billions in a single deal. As a result of the success stories of experienced realtors, many just attempt real estate investments without knowing precisely what they are getting into. There will always be opportunity in real estate investments, hence there is no justification for rushing into it without having adequate details of what you are investing in.
Like many other businesses, best practice is to start with what you have. Your extra cash or savings from your income is enough for your first investment. Securing loan for your first real estate investment is not a good idea at all. Hence, start with what you have. If you have taken that in, it is time to know the different areas of real estate you can invest in as a beginner.
- Real estate agency: This is one of the simplest areas you can establish your business in real estate. It can help you garner a lot of relevant experiences. All you need is to identify properties available for sale or lease, reach an agreement with the owner to transact on his behalf, agree on the commission to be paid and advertise among your network circles. It is easier for you as a professional because your colleagues will find it easier and comfortable to turn to you than an outsider whenever they are in need of any of your listed properties or similar ones. This particular business does not necessarily need you to have any start-up capital.
- House or Office rent: How this work is simple. Build a house or office complex, and let it out. You continue to earn your income as long as the property remains yours. You may decide to hand it over to an agent to manage for you or you may manage it yourself but you are sure to receive a monthly or annual income on it. The size of investment is dependent on the amount available.
- Land Flipping: This refers to buying of land and reselling it in a short while after purchase for profit making. This requires market access and strategy. If you are able to identify a ready market, buy a piece of land according to the capacity of your financial resources, then sell it off in the short period afterwards, and go ahead to buy another. Re-investing your capital and gains, you will sooner than later be able to transact large estate business that will run into hundreds of millions. What is required of you in land flipping is access to buyers, knowledge of the area and landowners, confirmation of authenticity of ownership and a smart strategy of reaching buyers. You are on your way to becoming a billionaire.
- Open space leasing: this is just taking extra initiative on putting your property to work while you wait for it to appreciate. How do you do that? Purchase a land in a good location and lease it out for temporary use pending the period the land appreciates. You earn while you wait and when the time is ripe to sell, you sell at a very good price. Hence you earn double.
- Property development: This is the most elaborate investment plan in real estate. It requires more finances than any other plan. Investors in property development most times pool resources together from a team of investors or even go ahead to secure loan from financial institutions to achieve their goals. They identify the ideal location to site luxury apartments or commercial real estates that they sell with very high profit margin. It requires the highest financial commitment and usually produces the highest returns.
Understanding which option best suits you is the right place to start. It is also advised that you start from the simple options and systematically graduate to the complex options. Experience is a very valuable requirement when it comes to real estate business. Luckily enough, such experience can be obtained with little investment.