For real estate to pay off your time horizon needs to be in the decades. You could get really lucky and invest in a plot of land that quickly increases in value. Most though are long term plays and will return well if you are willing to wait. A plot of land to develop would be good especially if you can collect some rent on the land while waiting to develop to something bigger.
With increases in population and less land available per person, buying land in the right place will be great for your portfolio. If you have the cash to invest in property and land you should do it. If you do not have the cash to buy your own land it would not be a bad idea to invest in a REIT or form a group of investors among people you know to buy land and property.
With the choice of getting into real estate you also have to think about the side of real estate you want. Do you want apartment complexes or do you want to rent to business owners. Each can be profitable but come with their own challenges. Apartment renting has high turnover and will require costs to upkeep the places and work on each apartment. The positives are the chances that every building is empty is very low and you can change the price of rents quickly because of the high turnover.
Commercial real estate positives are high rents and low turnover. The business will be a constant source of income. Until it leaves then it would be harder to attract a new business and could sit empty for years until a new business is persuaded to move to your property.
Each type must be weighed with what you want property you want to handle. It is a smart idea for young investors with a long time horizon. Not just for older investors looking to diversify.
No comments:
Post a Comment