As the global economy is recovering from the recent downturn, the real estate markets are offering more and better opportunities for investors. At present, property investment is regaining its positions and is becoming highly lucrative again. As a beginner investor, your primary task is to develop a strategy which will bring you maximum return.
The Main Options
The individual investor can select from a set of major property investment strategies. The most basic one is to purchase and hold a property with the intention of selling it at a later date. This is a suitable option for those looking to use the unit personally. One example is the purchase of a holiday home.
Perhaps the most popular of all options is the investment in a property with the intention of earning rental income. In the best case scenario, you will earn sufficient monthly income to cover all your expenses as a landlord and to make a small profit. This strategy is particularly effective in hot rental markets.
Property flipping is all about buying a property and selling it for profit within an extremely short period of time. It is highly lucrative and does not involve the extra work associated with being a landlord, but it involves higher risk as well.
You can choose to invest via a real estate investment group. The group pools money from investors to purchase or build multifamily units. Each individual investor can own one or more apartments and earn rental income via the group. The group is responsible for the management of the properties.
You can also invest in a real estate investment trust. It operates in the same way as a group with the major difference being that the investors do not hold properties, but shares in the trust. That way, they earn dividends instead of rental income.
You have to define your goals in order to come up with the most effective property investment strategy for you. You have to determine your starting position as well. You have to know how much you are prepared to invest and how the investment will fit into your current portfolio or business structure.
The strategy which you devise has to be based on the current legal and taxation requirements in the respective country where the property is. It should have effectively integrated legal and taxation structures which are created by experienced accountants. You have to have effective tools for implementing the strategy and for measuring your performance. These can be provided by the expert accountants as well.
Compare the different options and use professional assistance with devising the most effective property investment strategy for you.