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Three approaches to investing in real estate

Published: Fri, 06/17/2011 - 16:33
By: admin

Qualified investors are well aware of the need for diversification of investment. Risk allocation is achieved in different ways, one of which - capital investment in different asset classes. Stocks, bonds, bank deposits and precious metals, real estate and business projects - the most common areas of investment.


Real estate investments are a great way to protect your money from inflation and a moderate capital gains tax. However, not all this asset class gives the desired result. What are the different approaches to investing in real estate? How to use each approach to the maximum benefit?


1. The most common way to generate income from the ownership of real estate - rental payments. Owners of homes, offices, holiday apartments rent them out, getting a stable monthly income. Owners of rental properties are at less risk during market volatility. In the absence of debt load they can move even the temporary absence of the tenants. Best is buying commercial buildings - warehouses, offices and commercial premises.


2. Another approach to investing in real estate - buying an object with a view to resale at a bargain price. This approach is justified in periods of economic growth and the availability of strong demand in the market. However, residential and commercial areas can be cheaper, like any other asset. Thus, investors who have invested capital in 2008, suffered considerable losses. Spanish property prices dropped by 50%, American, Portuguese and Greek - at 30%. The most wise investors are buying assets is in a strong fall. The next few years can be considered successful for the purchase of assets in countries hit by the global financial crisis.


3. Investing in real estate development - this approach is available to wealthy people. Development projects provide profitability, measured by hundreds of percent. It is worth noting that investment in construction have the highest risk and greatest potential for earnings. For example, changing market conditions and economic situation in Spain has led to hundreds of new sites in the resort regions are idle waiting for the owners. Construction companies are willing to sell them at a discount of up to 50%, but the buyers still do not appear. An example of a successful investment in construction - the company has built a Marriott resort on the little-known islands of St. Kitts and Nevis in the Caribbean. Today it is one of the most popular resorts in the Western Hemisphere.


Want to know more about investing in real estate in the personal financial planning? The company's specialists Farlega Investment Limited will answer your questions.