What types of real estate investment are there? Which type should I invest in? What are the advantages and disadvantages of each type of investment? This article will be an analysis of which type of real estate to invest in.
What is real estate investment?
The phrase real estate investment is probably too familiar to those working in this field. Real estate investment is a form of business for real estate products to generate profits and it is not simply buying and selling to benefit from price differences. Real estate investment has a broader scope including buying, selling, leasing, renovating, managing or even new construction.
When getting acquainted with real estate investment, you also need to distinguish between investment and speculation, because they are two completely different concepts. When the supply of real estate on the market does not meet the demand, speculation will appear, that is, buying assets with the aim of reselling them at a higher price in the near future. This form will have many potential risks and only lasts for a short time. Speculators will cause the market price to be pushed up due to the scarcity of the product. Real estate investment is long-term and will depend on the subject as well as the value and actual development of the investment product. Although real estate investment can also take place in a short time, its nature is still a relatively long-term job.
Real estate investment strategy for people with little capital
When you have little capital but still want to invest in real estate, apply some of the strategies below.
Joint investment in land plots
One of the real estate investment strategies for people with little capital is to contribute capital to invest in subdivided land. This type of real estate receives the attention of many customers. When investing in subdivided land, the loss rate is extremely low. Because it requires a lot of capital, choosing to invest together is the right strategy. To be effective, you need to find trustworthy people to work together. Make clear and transparent agreements on the capital and profits of each person. In addition, investors need to carefully research the project, the investor as well as related legal documents.
Buy and sell quickly
With this strategy, you sell the property as soon as you buy it, or you renovate it and then sell it. Similar to renovating an old house, this strategy requires you to buy a property that is worth less than the average market price. Although it helps investors recover their capital quickly, this strategy requires a large amount of equity and sales skills to promote liquidity. If you cannot sell the property quickly, the equity will be "stuck" in the property and cause great damage.
Real estate broker
This is a familiar strategy in which the investor finds a good property, connects and assists in negotiating the transaction between the buyer and seller, and collects a commission or the difference between the seller's desired price and the price the buyer pays. This strategy requires no capital, but requires you to have extremely good marketing and sales skills.
Renovating dilapidated houses
This strategy involves buying a property at a below-market price, renovating and upgrading it to add value, renting it out to pay off the mortgage, and using the property as collateral for a mortgage. The key to this strategy is to buy a property that is undervalued. The work behind it requires the investor to have some knowledge of construction and architecture so that he can make improvements that increase the value of the property, such as new paint, installing wood floors, remodeling the kitchen and bathroom, adding bedrooms, etc. The added value from the upgrades will increase the property's valuation, allowing the investor to sell it or borrow more money for other purposes.
Buy old house at good price, renovate then resell or rent
According to this business strategy, you will look for old houses, but not too dilapidated that the owner does not have the conditions to repair. Then you will repair and renovate them in a style that suits the trend. In order to resell at a higher price or use them for rental purposes. Investors need to note: The value of the house includes both the purchase price and the repair cost. Investors need to clearly understand the general price level of real estate in that area. To make sure that you can resell at a profitable price or rent at a good price. The house has complete legal documents. Issues related to legal documents must always be carefully checked. Whether you buy an old house from an acquaintance, relative or a stranger. Understand the surrounding living environment. Understanding factors such as population density, neighbors, special events that have taken place here... will help minimize risks in this business strategy.
Buy properties for quick sale at cheap prices
This is one of the ways to “hunt” to help you find “good prey” when you have a small amount of capital. People who need to sell real estate urgently to pay off bank loans, transfer jobs, take care of family matters, etc. are willing to sell at a lower price than the market price. But before deciding to buy, you also need to calculate whether it is easy to resell the property. Besides, you need to find out whether the location of the land is in the planning area or has any legal problems. This will help you minimize the problem of losing or burying capital.
Conclusion
Above, AHS has provided you with effective real estate investment strategies for people with little capital. Hopefully, this will be useful information for you to apply and succeed. Don't forget to contact us if you want to learn about potential real estate projects!
