Many people in the US don’t connect investing in real estate to retirement. Furthermore, only a few consider downsizing and opting for a smaller-sized home or a reverse mortgage. All this is not because US citizens are not sophisticated but because they have a lot of safer, easier and simpler choices they can take into account when it comes to making an investment. In many countries outside the US, real estate is the crème-a-la-crème of investment types.
The stock market is only reserved for those who can actually understand it, and foreign financial rules and regulations are not that robust. Real estate can be a secure form of investment for everyone regardless of their budget or expertise. However, it does come with risks ones should learn to steer clear of.
Take advantage of a vulnerable market
Believe it or not, investing in commercial property is a great way of building wealth without taking too many risks. The key to success is to take advantage of the market’s vulnerabilities. But then again, to make that happen you need to keep an eye on current trends and periodic changes. Abandoned office buildings and half-finished developments have excellent investment potential. Let’s not forget that we’re still dealing with an economic crisis that affects the real estate sector the most. Investors should take advantage of that weakness and get to know more about the pros and cons of property investing.
Develop a bullet proof strategy
A bullet proof strategy is the best way of tapping into the real estate sector without risking it all. They say that experience makes us good at what we do, and they couldn’t be more right. However in real estate, one mistake can be enough to convince you that property investing is not for you. Don’t let that take you down and look for a way to develop a bullet proof strategy. Talk to the right people and get advice from professional realtors.
Acknowledge that you won’t be able to avoid certain mistakes. But treat them like a lesson and learn something from them. In time, you’ll be able to spot the difference between an investment with great potential and an investment with zero potential. If you’re new to this business, the key to a good start is to have a plan. It will guide you through this entangled maze of tough choices and it will help you stay organized.
Use ETFs (exchange-traded funds) to invest in both commercial and residential property without taking too many risks. With a retirement portfolio that’s properly designed, owning property acts like a hedge against today’s inflation rates; thus generating income (much like the returns you get from bonds) however with the inflation-dampening effect of a commodity. REITs are just enterprises that deal with buying and managing real estate; properties implied are often times apartments and commercial properties like healthcare centers and malls. There are many benefits to owning REITs. The most important is the stable monthly income.
Understand the get-rich-slow process
If you want to build wealth with real estate, you have to know that the whole process will take time. We’re talking about a get-rich-slow type of process that future investors must fully acknowledge it they want a shot at success in the business. Persistence, careful planning, and patience and three essential traits you must learn to master. Without a well-crafted strategy to guide you, the final outcome may not be what you’ve expected. Start by getting all your finances in order. The more organized you are, the better chances you have to make crystal-clear investments.
Your next step is to form a property criterion – type, location, and size. Keep in mind that for each property criterion, a specific set of skills is required to see long-term returns. There are no rational decisions in this business sector, and every decision that you make comes with a level of risk. Nonetheless, this shouldn’t stop you from making decisions. Observe the market and get a feel of how it works. Read about new trends, news and recent changes, and with time you’ll develop expertise. Don’t be hungry for the money, and have patience. It will help you succeed!