Real estate properties serve varying purposes for different investors. Some people buy house and lot properties for their family to live in. Other people, however, buy real estate properties as investment vehicles. Investors in real estate earn in many ways. The most common ones are rent, value appreciation, and profit from sale after fixing a property.
Factors when investing
With an abundance of property investment options, you might be wondering where to invest and how to maximize your opportunities. There are factors that you can take advantage of depending on your goal in investing. To help you pick out the best property, below are the considerations for investing in real estate the smart way.
Location always comes first
The most important factor in any type of real estate investment is location. Smart investors look for properties in prime locations that offer present convenience and future growth. When choosing a property to buy, check its accessibility. Look for master-planned communities where everything you need is close by. This way, you make sure that your property increases in value and that it would sell profitably in the market.
In urban towns, it is best to choose properties near workplaces and universities since they are most likely to generate higher income. With a dense population and scarce land, the demand is always high in urban areas. That said, competition is also high, and properties for sale are also expensive.
Beyond the metro, it is smart to invest in master-planned house and lot neighborhoods. These are residential locations and bedroom communities outside of the city that serves as homes for the urban workers. When narrowing it down to the best house and lot for sale, make sure the property has access to urban conveniences.
Smart investing starts with the right mindset. When venturing into real estate, it is best to think long-term. The longer you wait in real estate, the higher your chances of getting greater profits. While you can still earn from real estate in the short term, you can maximize your investment by waiting it out.
If you are investing in real estate to diversify your portfolio, you may even extend holding a property up to 20 years then reevaluate. Real properties only increase in value, so your investment's appreciation is guaranteed. All of these then translate into long-term financial security.
Be Your Own Boss
When you invest in real estate properties, you are your own boss. That means you have complete authority over the management of your properties. You get to decide when to sell your properties, how much to charge for rent, and how much you want it sold. If you want to buy or sell properties, you just have to get in touch with a broker to close a deal. Unlike other investments, real estate is tangible, so you could truly see and manage your asset firsthand.
Maximize your property's passive income
The best way to earn money from your real estate properties without letting go of them is by putting them up for lease. This way, you own the property and all of its long-term value appreciation while still receiving short-term gains.
You can set up your property for short-term rentals like Airbnb or as a vacation house. If you are comfortable about managing it over a long period of time, you can be a landlord and lease your property to long-term renters. At the end of the day, you own the property and all its rent earnings.
Consider investing in REITs
Suppose you have seen the potential in real estate but do not have the time to manage your own properties. In that case, REITs would be your best option. By investing in these assets, you essentially own a part of companies that manage real estate properties. REITs are like stocks, only that dividends are assured with REITs.
REITs are also perfect for first-time real estate investors who want their investments easily converted to cash. With REITs, you can easily sell your shares and reinvest them somewhere more profitable.
Stay updated about market trends
While it is true that you are secure in real estate, it is still good to be ahead of market trends. Stay updated about factors that you can leverage to your advantage. These are things like bank interests, demand in properties, and emerging prime locations where you can invest your money.
It is also important to know trends in real estate on a bigger scale. Try to take a look at historical data when making buying decisions. How was the returns on real estate properties for the last decades? How about the historical return on REITs? Is real estate more profitable than stocks at present? By doing this, you can make more educated decisions and earn more.
Learn how to leverage
Although real estate properties almost always cost a significant amount of money, it does not need to come from you. You can borrow money from banks to finance a portion of a property for sale. The higher the value of the property rises, the more gains you earn by leveraging your real estate investment.
If you think TikTok is just for fun with all its dance challenges, viral memes, crazy impersonations, and lip-syncs, you may want to reconsider. It is time for you to explore once again this Chinese social network.
This short-term video platform has gained immense popularity when the pandemic hit in 2020. Just like any app, TikTok also continues to evolve. TikTok brings not only entertainment to its viewers but also educational and financially related videos. These can now be easily seen when you search the hashtags “Moneytok,” “Financetok,” “tiktokpartners,” “Fintok,” “howtoinvest,” and a lot more within the app.
The Risks of Online Financial Advice
Since a personal finance community is starting to thrive on this platform, being exposed to the fundamentals of money management and financial literacy definitely requires thinking critically.
For experts, it is pretty easy to determine if a particular piece of advice begins to get dicey. For beginners, however, it can be hard to discriminate information. It is not easy to separate which direction is relevant to them from the stuff out of their league. Suppose you are just getting started managing your own personal finances. In that case, you might want to spend more time mastering its art and science.
There have been TikTok influencers who are posting a video of misleading and fake stock and financial tips. These content usually come in financial advice without disclaimers about the risks involved, potentially damaging the viewer’s finances if taken seriously.
Double Check the Creator’s Credibility
Before taking in someone’s catchy one-minute video about stock or house and lot investment, make sure you have already looked at who they are first. Do they include a credential list in their profile description? Do they have a website showcasing their accomplishments and portfolio?
Since this is an era where anyone can possibly become an influencer overnight, the internet is undoubtedly rife with amateur experts. While there is no strict requirement to be credentialed to give personal financial tips, there are still those who have worked years to prove what they claim to be practical approaches. Some even have certifications.
One of the newest TikTok partners is Financial Freedom Coach Steve, with a username @calltoleap and almost 11 million likes and over 800k followers. He tackles subjects like money hacks, dividends, stocks, options trading, and investing.
Context is critical.
Whenever you scroll for financial tips, remember that not all advice applies to you. George Blount, a behavioral economist, says listening to others talk about what worked for them can be an excellent way to know if you are doing things right with your approach.
Furthermore, Blout says using these TikTok videos as a reference or an example for your benchmark is fine. It only becomes a problem when it's your first time in financial management. It is dangerous to follow a path that may have worked for others but would not work for you.
Since every financial journey depends on goals, priorities, and even risk tolerance, it is best to fully understand your current situation and take every practical advice one step at a time. This is to avoid putting pressure on yourself by thinking that every tip should be applied at once.
Do not forget to do your own research.
Aside from checking out who the creator is, it is also essential to know if the tips are accurate. It is definitely wise to think not only twice before getting persuaded by a 60-second video you have just watched. There is galactic information behind every detail you had taken in from that short video clip you saw.
That one-minute content about how you can purchase your dream house and lot might have given you an idea of how to go with bank financing. But bear in mind that there are specific terms and conditions attached to it. Better dig in more helpful information online, particularly on each bank’s website. You can also do a fact-check on the real estate developer and its inflation rate and tax topic about accredited financing institutions that you are eyeing to invest with.
Perhaps an influencer motivated you to get your own insurance. They may have encouraged you to allot the same premium they are putting in every month. While this definitely can be inspiring, just do not forget that the money you allocate for your insurance highly depends on your current financial capacity. This indeed calls a consultation with a financial advisor who is directly working for the insurance company you are interested in.