Here are the 5 fundamentals of real estate investing you need to know.
1. The value of a piece of real estate is the future earning power of that particular piece of property.
The value is determined by the income generated when the property is developed to its full potential(highest and best use).
As a result, land in the desert or middle of nowhere – let’s say a forest – won’t be worth so much because they have no earning power. And they cannot be developed to provide accommodation or any particular human need.
Hence, they may continue to be worthless unless it’s fully developed and you expect to earn income from those who use them consistently into the future.
If you can’t earn on a property into the future then it may not be a good investment.
2. You make your money when you buy real estate and you realize it when you sell.
It is by purchasing at the right price and under the right terms that let you make a profit when you intend to sell.
Don’t be like most people who just buy a property at any price under any terms and think they’ll make a profit whenever they want to sell.
This is far from the truth. In fact, I learn this the hard way.
3. The 3 keys to real estate investing are location, location, and location.
Each real estate is unique just like a Non-Fungble Token(NFT).
Your ability to choose a piece of property in an excellent location will have more impact on the future earning power of that property than any other decision you can make.
Real estate values are largely determined by general economic activity in the area and by the number of jobs and level of wages/salary
4. Business activities are important in the area you choose to buy real estate.
A place with little to no business activities means slow growth and less appreciation in the value of the property, vis a viz.
5. The best place to start is by becoming an owner.
Start investing in a good location and ensure you employ your skills and knowledge.
You’re not a real estate investor until you own a piece of real estate.
There’s a great difference between a real estate marketer and a real estate investor.
Thank you for taking the time to read this post.
You can read the full article here.