REAL ESTATE INVESTMENT

Every season comes with its own opportunities and challenges. Real estate investment has proved to be one of those vehicles that reflect this dynamic mix of opportunities, risks and returns. It is an investment vehicle of choice to the discerning mind that understands and can navigate the risk.

To maximise your opportunities in this sector, you need a fair understanding of the various options available to you. Based on several factors, most investors focus on one or two of the options and only shift to other types of real estate investments after getting a good grasp of the available options.

One of the options available to you as a real estate investor is buying vacant land and holding it for a while. A vacant land with good title is a good investment if you follow the location’s rule. One of the benefits of buying vacant land is that as long as you are buying for investment purposes and you are ready to give it a long-term view, you can purchase the land in areas that are presently remote and undeveloped. Buying land in an area that you know is undeveloped does not necessarily translate to wealth for you unless certain factors have been considered.

Demography is one of the key determinants of areas that a person should consider for investment. If a location has certain factors in its favor, it will likely appreciate faster. But if these factors are not properly considered, a person could miss some fantastic opportunities or invest in a very slow area where it will take years to recoup your money. Since you are more interested in capital growth at this time, it is always good for you to buy land within a ‘line of growth’.

There are areas that are within a radius where physical and economic growths are expected to take place. The closer you are to these areas, the more expensive the land will become. The further you are to existing infrastructure, the cheaper the land will become. Once the right factors are taken into consideration and you are prepared to wait, it is simply a matter of time before you reap the dividend of your investment.

Another strategy that could be applied to vacant land is to buy wholesale, hold and gradually offload at a profit. The first benefit you derive when you alone or with your partners decide to buy wholesale is that you can use the number to get a discount from the seller. You can also use this to leverage payment by installment.

Most sellers are prepared to give you a flexible payment plan if they know that you are buying wholesale. The benefit of buying more than one plot of land is best felt when after the property has appreciated, you decide to sell one or more parcels of land.

If the property appreciates fast enough, depending on the number of plots, you may make enough money to cover your initial investment and still make profit while still retaining one or more plots.

Another possibility is that you can buy a property or building, hold it for a while without adding significant value and then sell or flip it as soon as you get a good offer or deliberately buy the property and renovate or add serious value to it before pushing it back into the market for sale. The latter option that involves adding significant value by renovating the property is better.

Value addition gives you a legitimate right to ask for more and often increases your profit as a real estate investor. Depending on the skill, imagination and funds available to you and your team, you can transform the property and make it a money spinner.

The advantage of this option is that you always negotiate with the owner from a position of strength. Your aim is always to buy at a discount based on the current state of the property. What you can do with the property should not be discussed with the seller as this is your business secret.

Your job is to buy it at a cheaper rate than its true worth, spend time and money to bring out greater beauty from the property and sell or lease for a good profit. This is an option that you should explore and research well before you enter into it.

You should enter and grow it slowly, one property a year so that you do not over extend yourself. With a good strategy, the possibilities are enormous.