Aiming for the right real estate investment strategy
Since the beginning, the real estate market is the one that most people turn to first when they want to invest. It is thus possible for them to to constitute a heritageto ensure the future of their families and to better prepare their retirement.
Real estate investment and market research
Before launching yourself headlong into an investment, you must necessarily proceed to a market research to determine its profitability. To do this, you will need to:
- Investigate on all market prices, whether for sales or rentals;
- Ensure that the real estate market is large and functional around the investment area;
- Define your potential customers Families, retirees, students, professionals on the move or tourists;
- Define the duration of your rental;
- Make sure that your investment is capable of generating a good return, for this you will need to conduct a profitability study ;
- Have a profitability of at least 8%; the calculation is made according to the rental rates and sales prices in the area of the property acquired ;
- Make sure that the property will guarantee you a monthly cash flow able to cover the amount spent throughout the credit.
How to determine your real estate investment strategy?
First, you need to set a goal for yourself precise: to rent the property for to have an additional incomeTo buy a property in order to resell it or to constitute you a heritage. It is important to set a goal in order to choose the most appropriate strategy. You must also inform you on the possibilities that the real estate marketThere are many options, and you will need to know the differences between them in order to be able to choose the one that will best suit your purpose. We do not recommend that you choose a strategy based on someone else’s experience without understanding what it entails.
A strategy that works for someone does not mean that applying it to your project will yield similar results. If your goals are different from theirs, then clearly the strategy to be applied must also be different. Finally, your budget as well as your family situation and your availability are also criteria you should consider.
What are the possible real estate investment strategies?
As soon as you think about real estate investing, the purchase of a home is often the first idea that comes to mind. For people who want to have an additional income, theinvestment for rental yield seems to be the most adequate solution, it allows in particular to reduce the taxes by defiscalisation, which consists in acquiring a real estate in order to rent it. Acquiring a building, or a living area and dividing it into several premises for renting, investing in a large dwelling and dividing the area into several individual rooms will also maximize the owner’s gains.
Other people prefer to invest their money with less risk, the patrimonial investment is for them the ideal solution. It consists in acquiring a housing in zones known as with low risk, it does not bring no regular incomebut the value of the property increases over time in line with the growth of the market, which will later result in a much higher resale price than that at which it was purchased.
Some people are content to invest a few hundred euros to avoid the stressful process. The collective investmentmore commonly known as “paper stone”, is a good alternative for them. It consists in collecting savings from individuals through a investment fund which will invest it in various real estate assets. Individuals become indirect owners of these assets and are then entitled to compensation.
There are two categories of investment funds: collective investment schemes and real estate investment trusts. For those who do not wish to go through these organizations, there are internet platforms that put potential investors directly in contact with project holders. We also find the principle of real estate crowdfundingwhich allows you to invest directly in a project without going through intermediaries while receiving a fee.
For people who simply want to make a profit their savings, it would be interesting to invest in agricultural land, for example, but only if one is already holder of an important patrimony.