Things To Consider Before Investing In Real Estate
There are so many appealing factors to investing in real estate. Compared to investing in stocks, bonds or funds, real estate offers a less risky alternative, but still a high potential for returns. If predictable cashflow is what you’re after, real estate is for you.
For hesitant investors, real estate is a great place to begin, because it offers a stability that other means of investing can’t promise. Real estate is everywhere, so it’s easy to get involved in, and you can find plenty of support should you need it.
Yes, there are certainly benefits to real estate investing, but before you jump straight into anything, you need to spend some time deciding whether this is in fact the investment solution for you. Ask yourself the questions we’ve listed below to ultimately get a better understanding of whether real estate is something worth investing in:
What are my investment goals?
Everyone has a unique approach to investing their money, and different investment goals are often suited to different types of investments. If you’re happier to take bigger risks for higher returns, you might want to bypass real estate altogether and go for something like bonds and stocks. If you still want a good investment but with slightly lower returns and less of a risk, property is more likely to be for you. Be aware, though, that real estate investing is pointless unless you’re prepared to be in it for the long run. You need to be happy to part with your cash for a significant period of time – ten years minimum is best.
What’s my current life situation?
Before you even consider investing in real estate, you need to evaluate your own current life situation. Whether you’re single, a parent, renting or living in a bought property, and what job you have and the area you live in can all determine your stability in life. You want to make sure you’re in a position where your life isn’t going to drastically change, leaving you unable to handle your real estate investments, any time soon.
How stable is my income?
Real estate investing is a long process by nature. You’re going to need to be able to make long-term payments if you’ve secured a mortgage, and for that, your income needs to be stable. It can be all too tempting to jump into investing in real estate when business is particularly booming, but if you can’t guarantee year-on-year success, you may need to put your investment plans on hold for the time being. Many people have to take out loans to kickstart their real estate investing, which can be incredibly risky if you can’t be completely sure you can pay them back.
What’s my credit score?
If you’re looking to invest in real estate, you need to first be certain that you’ll be able to do so. Even if you have plenty of funds set aside, if your credit score is too low, you might not be open to many of the real estate investment options. Even if you are able to invest with a low credit score, be aware that mortgage interest rates are generally going to be a lot higher. Make sure that your credit score is looking good before you go into real estate investing, and you’ll be able to get a lot more out of your efforts.
Is this the right property to invest in?
When you’re investing in real estate, location is key. You might want to start small and invest locally, but be aware that you’re likely to get the biggest returns from investing in popular overseas real estate destinations, such as Hawaii. Do your research and decide which location suits you most. Make sure you have a clear understanding of the property market of a certain area, and, if necessary, the ins and outs of foreign investment, before you part with your cash.
Should I be a landlord?
Not everyone is cut out to be a landlord, and if you don’t think the job’s for you, that’s not a big deal. Landlords have to take on a lot of responsibility – aside from keeping their properties occupied, they have to be consistently available and contactable to deal with any issues that may arise. Just because you’re a real estate investor, that doesn’t automatically make you the definite landlord. If you’d prefer, you can hire somebody to take over the managing of your property for you, taking the extra pressure off your hands.
Do I need help from an outside source?
If you’ve never had any real estate experience before, it might make the most sense for you to seek help from an outside source. You might prefer to put the more difficult work into a professional’s hands and use an online real estate platform rather than purchase a property yourself. Or if you’re ready to get right into the thick of the action, a financial advisor or an accountant may be able to help you organise your funds and prepare for your investment before any key decisions are made.
The Best Real Estate Locations In The World
Looking to buy real estate overseas? If this is a new experience for you, you’re probably going to be stepping out of your comfort zone, but opening yourself up to so many new options has the potential to create some real returns. International property has long been one of the safest and most rewarding investments, so the quicker you can get involved in the market, the better.
That’s not to say that international real estate is worth rushing into. You want to make sure that the locations you focus on are appropriate for your personal investments, and will ultimately give you the greatest returns. Take a look at the below list of our top 12 real estate locations if you’re looking for the best opportunities for overseas investment in 2020:
Brazil
The coastal area of Brazil is a favoured real estate destination in particular, thanks to its strong demand and increasing popularity with American and Brazilian tourists. At the moment, you’ll find that beachfront investment in Brazil is still fairly low-cost on a worldwide scale, so it’s really worth taking advantage of while the situation remains the way it is.
The Dominican Republic
Improvements in transport links mean that the once-remote island of The Dominican Republic is now well and truly a tourist vacation favourite spot. In particular, Santo Domingo, the capital of the Dominican Republic, is seeing immense real estate growth, with improved overseas investment. With increased links to the outside world, this tourist hotspot seems set to only continue to grow in the future, so there’s no better time to get investing.
Hawaii
Hawaii is a destination that has historically done well in the real estate sector. With competitive interest rates and a wealth of good buying opportunities, Hawaii is a real estate favourite for many long-term investors. Thanks to ever-increasing tourist interest in the renowned vacation destination, even those with only a little money to spare can benefit greatly from Hawaii’s real estate situation. If it’s security that you’re after, you won’t often be let down by Hawaii.
Orlando
One city that’s seen real overall growth in recent years is Orlando. The Florida-based city has twice been listed as one of the best places to buy a house by Forbes, and when you look at its ever-increasing transport links and visitor numbers, that’s hardly surprising. With predicted future job growth and population growth, and affordable real estate pricing, you’re best getting in on the action while you can.
Thailand
It’s arguably one of the hottest eastern tourist destinations of all time, and it doesn’t seem like Thailand’s popularity is going to diminish any time soon. This makes its real estate potential huge – and as of now, housing prices are fairly low, so there’s no better time to invest. Focus your attention in or around Bangkok, which is said to attract millions of visitors a year.
Paris
Paris has long drawn international interest in the property sector, thanks to the French city’s vibrant culture, thriving work scene and historical relevance. As you would expect, the real estate prices in Paris move up and down from year to year, but on the whole, property demand remains high, and it doesn’t look like that’s about to change any time soon. The exact location of investment depends on your budget, but if you’ve got the cash to splash on a central property, you’ll certainly reap the long-term benefits.
Chicago
You might not have even considered Chicago as a good place to invest, but actually, the Windy City offers some of the best real estate opportunities in the US. With a good average return on investment for rental properties in the long run, it’s worth considering seeing what the city has to offer you. For the best returns, invest in the winter months while there’s more leeway for negotiation.
Portugal
The property market in Portugal has been on the rise for some years now, and thanks to a boom in tourism, the country has become one of the best locations in the world for investing in real estate. Focus on properties along the Algarve coast, which have the highest investment potential and the biggest long-term appeal.
Ambergris Caye, Belize
The advantage to some locations with the greatest real estate potential is that they’re still emerging, meaning there’s no better time for you to get involved. Ambergris Caye is the largest island in Belize, a rapidly growing vacation destination on the eastern coast of central America. Thanks to its mild weather conditions and potential for further growth, Ambergris Caye is a current favourite amongst real estate investors looking to make long-term gains.
Panama
There’s no better time to look into buying beachfront property in Panama than now. The city has really grown in the last decade or so into a vibrant hub of activity, yet prices still remain a total bargain in some cases. Some investment areas are riskier than others, so make sure you do your research before finalizing a deal.
Italy
European tourist destinations are only ever going to increase in popularity, and Italy, which is only now gaining global recognition for its tourism potential, is amongst the top real estate locations of them all. Along the coast, you’ll find some of the most competitive real estate prices in Europe, and thanks to its culture, history, art and food scene, the destination will continue to draw in tourists for years to come.
Colombia
Colombia might not have the most fortunate history, but this only works in its favour when it comes to its future in the real estate market. Look towards property prices in the city of Medellín, and you’ll find that they’re relatively lower than prices across the rest of the country. Prices are only going to continue to rise, but you’ll still find some incredible deals if you’re looking to invest in 2020. Colombia is definitely the underdog of real estate that’s worth watching out for.
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