Embarking the world of real estate business is a high-risk investment yet may provide lucrative profits if managed properly.
Investment properties are perennial. These assets can endure the test of time and may provide an income-generating source for a lifetime. Real estate is not everyone’s cup of tea. You must plan it carefully whether you’ll venture in this business and come up with strategies to monetize your property.
In dealing with real estate, here are the necessary things that you should consider:
1. Evaluate Your Financial Standing
Venturing the real estate business requires a financial capacity to acquire such property. There are two options in financing these fixed assets. You may enter into a mortgage agreement or use your equity financing to acquire the asset.
However, it is not advisable to depend on a pure mortgage. You should at least have equity to shoulder the costs. The maximum leverage to have a balanced debt and equity ratio is around 40% debt and 60% equity. This measurement is still considered as a safe zone to manage your finances.
In financial parlance, you should both have good liquidity and solvency standing. It means, your cash flows are readily available for short term and long-term expenses and liabilities.
2. Pool Investment Funds to Acquire a Real Estate
Some entrepreneurs are entering into a partnership or joint venture to pool enough funds in acquiring properties. This is a good investment strategy and it divides the risks at the same time. However, you should discuss these matters to a trusted partner or venture.
In the US, the venture capitalist is a popular investment partner. They both share in the profits and losses of the business. These capitalists also share their knowledge and techniques in making the business successful. If you can find a venture capitalist in your country, that would be a great gamble to bet.
3. Conduct Research and Property Tripping
Are there any nearest malls, market, schools, or hospitals around the area? These places are some of the things that you should consider in conducting research. The location should be viable and accessible to your workplace or home.
In this way, you can estimate whether the location looks marketable to the public. If you plan to acquire a property and lease out it in the future, check whether the location suits the tenant’s preferences.
Some real estate agents allow property tripping in their subdivisions or villa. In this way, you may have a closer look at the premises and examine the place properly.
4. Talk to a Real Estate Broker
As we all know, real estate brokers are professional when it comes to selling properties. Some people are even being carried away with their sales talk then they end up buying the property.
As a piece of advice, you should expand your horizon in talking with real estate brokers. Consider having at least three to four meetings with different real estate brokers. If you do this, you can weigh the acquisition costs of the properties. Thereafter, you can choose the best location with a reasonable acquisition cost.
5. Understand Different Business Strategies involving real estate
In a real estate business, there are different ways on how to generate some profit. Let’s say, you acquired property from North Lakes, a suburb in Brisbane. Perhaps, you are getting pumped on property Brisbane and thinking what to do next to monetize your asset. Here are the best ways to generate profit in no time:
a. Lease it Out and Become a Landlord (Long-term)
In a traditional rental per se, you can be a landlord and receive monthly rental income from the tenants. The marketing strategy here is quite simple because you’ll just need to post the rental properties in social media. The tenants can be individuals or small business owners.
b. Consider Renovation Flips
Some investors acquire distressed and old properties to renovate them. After restructuring the building, they will turn it into a new premise. This real estate business requires a huge investment since after buying the building, you still need to rebuild it. Although costly at first, this business strategy can surely provide huge profits in return since you will sell it after the renovation process.
c. Launch it in the Airbnb
The property listing is also a viable source of income for real estate owners. At Airbnb, you will have a wide target market. It also offers a cheaper price than hotels that’s why many tenants are checking in this site. The tenants are also required to have a verified profile. In this way, the landlord will know if it’s safe to rent out the property to someone for a few days.
d. Become a Hotel Owner
Hotels and inns are also popular among travelers. These staying facilities are usually accessible within the cities. If you’re thinking to build hotels or inns, it’s also a great investment opportunity. However, it entails larger investments as well. Aside from leasing out a room for guests, you may also earn income from the food, spa, and other services to offer.
