The Right Questions To Ask
Although it’s widely accepted that a strong real estate investment has the potential to generate considerable wealth, in the recent past, relatively few investors had the chance to acquire the first-hand experience with this asset class. Despite its many advantages, real estate can be a complex investment. With today’s wide availability of opportunities, it’s as important to know how to approach all types of real estate investment methods
Sharp investing starts with knowing how to ask the right questions. No matter which method you plan to use, these are questions you should consider beforehand.
1. Do you have the time and expertise to invest actively, or would it make more sense for you to invest passively?
There are major differences between active and passive real estate investing, and most investors will have a clear inclination for one over the other. However, if you just started thinking about investing in real estate, most likely you have not figured out exactly where your preference lies. Once you do, you’ll likely identify which option best suits your situation.
2. What’s your investment timeline? And, how important will liquidity be to you in the future?
Defining a timeline is crucial for any investment. Make sure you know if and when you’ll need additional capital, and, whether the investment can support your particular needs.
3. What makes a particular real estate investment attractive to you? How would you define success?
Knowing what matters most to you in an investment will help you determine a clear view of what success in this investment can look like.
4. How well do you understand the specific area where you’re planning to invest? What are the local opportunities and risks?
“Location, location, location” is a saying as accurate as it is cliché. What does the future of the place you are looking to develop look like? You need to make sure you can account for as many location-specific variables as possible, ranging from natural disaster risks to noise pollution, all of which can make it difficult to secure tenants.
- What asset type and strategy are right for you in your given market?
The most obvious real estate assets for direct investment are residential (apartments or town houses). Nevertheless, ask yourself, are there any other variables that might make another asset type a more promising option? Retail or office space? Assess the options and make sure your money is doing the most it can in any obvious circumstances
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