Last weekend, one of my friend invited me for Dinner and during course of informal chat, he informed me that he has aspiration to start his own business….Its not only this gentlemen but there are whole lot of executives who would like to quit their job becoz of uncertain economic environment & are seriously considering to try their luck in entrepreneurial skills. These people are looking for some great project for investment. Though its easy to say but to start own business is also very difficult task & involves very high risk.
I gave a thought for a while and suggested my friend, why don’t you consider much safer option of investing in real estate market becoz currently valuations are also fairly reasonable and from day 1 he can start making money from Purchased home. Secondly he need not to leave his job & Real Estate is productive asset which will only appreciate over a period of time….Though this thought came to me during informal chat but Let me tell u that its a great way to pursue a new line of business and earn some additional income.
Some inputs from my end, if u r not a seasoned player of this field and you are just getting started, there are some important things to keep in mind.
First of all, if you are pursuing this as a business opportunity, it might be a good idea to bring in a partner. This will spread out your financial risk (flip side, it will also reduce your financial reward, but that can always be made up with expansion). Another advantage of business partner is that you can discuss issues with him, he can help you market the property and can also help you to manage the property.
Next, it is very important to take a look at your finances. What exactly are you trying to do with this investment? Are you looking for a place to park some money and hoping to get some return? Or do you want to make a large investment in property, possibly with significant renovations and upgrades & would like to go for a huge return on your investment. This will help you to determine what type of property you should buy or purchase. Normally high end properties yield lower returns compared to mid-segment.
After finalizing your requirement, When you start looking out for potential properties, you may adopt various approaches i.e. either you can contact a realtor and let them know exactly what you are looking for or you can also take help of biggest invention till date i.e. Internet. There are lots of websites available where you can search for property classifieds like Sahipasand and Olx. Going online will throw many options to chose from and you can also compare various properties as per your requirement.
Location is the key element, so always do your research before starting search process. Some key considerations are neighborhood of property, What type of people live in that area area? Will you be able to rent or lease to a tenant that fits into this neighborhood? Always look out for upcoming areas with booming, healthy real estate market. For example urban areas are usually more profitable for investment than semi urban or rural areas with bad infrastructure. Most critical part is to do a proper research on prevailing rentals in the area & accordingly what is the fair market price for property. If you are not going to make any return on your investment then it might be wise to look elsewhere.
Also evaluate the condition of property and it should not be too old. Secondly, is it plug in play set up i.e. someone can directly move or it repair some repair work. Please take into account all these costs before investing. Buying a cheap neglected property and then fixing it can also be a wise move, but make sure how much money you’ll have to invest extra in order to repair it & convert it into livable set up. It’s also better to take help of any professional in this regard and he can help you to evaluate the cost of the necessary repairs.
While it might seem like a big investment, with the right preparation and research anyone can easily purchase a home and turn it into an income producing property, especially since nowadays with internet on our finger tips, it is possible to find houses for sale online for very reasonable prices & at click of mouse.
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