Does Your Affair With Real Estate Investments Read Like A Rags to Riches Story? If Not, Make It One
It is much simpler to get rich from real estate investments than many other forms of investments. Yes, if you have fallen in love with real estate investments, your affair can actually turn out to be a rags to riches story, given the strong returns investing in real estate ensures. But, before you get rich, you get poor first after your savings are invested in the property you buy. You also might end up getting burdened by a home loan. The pain, however, is worth it.
More the effort into buying a property, more the benefits you reap later. Here are some ways to maximize gains from real estate investments:
1. Develop low value property: Many resourceful investors buy old and unkempt flats and apartments in good locations. These might just be apartments in older buildings with broken floors and walls. The owners might not have not shown interest in maintaining the property. Such properties are usually sold at a lower price than the market rates and the owners' interest is equally low because of the low rental it earns them. A smart investor can buy such properties and upgrade them with quality fittings and fresh paint. Some even choose to furnish them to cater to the increasing demand for furnished apartments in cities. The rental earnings will easily double and recover the investment made in sprucing up the property within a year.
2. Buy auctioned/foreclosure properties: These are sitting duck properties. Banks and taxmen regularly sell off properties of errant owners. One should be on a lookout for announcements to this effect. A lot of investors have made a killing of such properties as they tend to belong to rich people who have landed into distress sales and come with many perks attached. However, you must be all set and ready with your finances before you start looking out for good opportunities. The wait is also long.
3. Buy bare land: Do you see infrastructure projects cropping up in a relatively unknown area? That is an indication that its property values are all set to go up. You can enter into a property deal at this stage by buying bare land and freeze the investment for a few years. Even a small parcel of land might yeild great returns. The wait for this investment might not be very long, as sooner or later, builders will come looking for land to launch projects. You can make good money off the sale and even bargain for an apartment in return! Beware of squatters, though, as it can ruin your investment.
4. Farm investment: Though farming seems distressing as there is a sad story to read about it every day, investors, who bought fruit orchards in water-rich areas, have success stories to tell. Choose a farm that is managed by someone who is living in that area and enter as a partner. A few people made money by breeding freshwater fish as well. The annual capital investment into such parcels of land is low but the returns are high.
5. Lend to real estate investors: This is a comparatively easier version of making money. You can lend savings money to a developer or someone making a real estate investment for a long period of time on the condition that he or she shall pay it back after the investment yields its returns. This will rid you of the burden of taking a loan but you should stay just as cautious with the paperwork. The interest rate that such investors are willing to pay is good enough to land you a small fortune. Be sure to have good collateral in place.
(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)