Depending on who you ask, investing in real estate today can be a debatable subject. The property boom the local market experienced several years ago has finally simmered down, no doubt further acerbated by the pandemic.
For property hunters, this translates to more conducive opportunities in the marketplace. Due to it being a buyers’ market now with property overhangs, prices of real estate are now a lot more ‘friendlier’ compared to what they were several years ago. Plus there are also incentives in place today, coupled with lower interest rates and the extension of the RPGT (real property gains tax).
This makes for interesting opportunities in the real estate market provided you know what to look out for and capitalise on. After all it is a real asset and it has intrinsic value, and as such requires a fair amount of capital, research, effort, and time invested in it if you want it to deliver dividends. Here are some angles that you may want to consider if you’re game to dip your toe into the investable real estate market.
Do A Flip
Before, it was common to see people snapping up a brand new property at launch, hold on until its completed and then sell it off for a quick buck. We don’t see this happen as often as before but that doesn’t mean you can’t flip a home in the current climate. We’ve all seen the wonders of HGTV, but let’s not get too ahead of ourselves, because it is reality TV, after all.
Flipping a home requires strategy and a bit of luck. The key to making this a successful investment is to find an under priced or below market home. Look out for urgent sales, auction properties and you may well find something worth considering.
Finding a place is just the first step, the next requires you to pull out your trusty calculator. Factor how much it would be to fix up the place before putting it back on the market for a higher price. By sprucing up the place, you can force appreciation, by adding value and appeal to the home. Bear in mind though, the key to a successful flip is holding on to it for the shortest time possible because you are ultimately paying a mortgage for it.
Rent To Own
We’ve covered the viability of rental properties before as a form of passive income. But the realm of rentals goes beyond just long term and short term leases on real estate. You can maximise your investment returns through various forms of rental. This includes renting the entire home out to a long-term tenant or transform it into a holiday home for a platform like Airbnb.
Additionally you can also rent out part of your home. Converting a spare room or converting a space into a liveable area is fairly easy and does not require a substantial investment. Done right it also affords you the opportunity to gain some revenue to offset against the monthly mortgage. Provided of course you don’t mind having someone else living under the same roof.
Don’t Neglect Commercials
It pays dividends to look beyond the confines of just liveable abodes and homes. Commercial properties offer a way for many real estate investors to gain passive income. But take heed because Commercial Real Estate (CRE) is more beneficial over the long term.
Like most properties, location plays a big role in how this real estate will perform. Upcoming developments or townships could pay dividends as do locales, which are currently being developed. Keep an eye out for areas that have an oversupply of CRE, which could damper chances of fetching good rental rates.
Some CREs that should be looked at are shop lots, especially in housing areas, which offer relatively stable rental gains from SMEs. Office spaces are also considerable investable assets as they tend to be in operation for at least a few years, translating to relatively stable rental yields.
Other forms such as warehouses and empty land or lot could also be utilised for storage especially if they are located within or nearby a manufacturing or industrial hub. Most CREs tend to be on the high side of real estate investment as such fractional ownership can be considered. It involves getting a group of like-minded investors to co-purchase the unit as a shared asset, which you can grow and manage together.
Like most investments, putting money on an investable property is big decision. It ultimately is down to how much of capital and time you would want to invest in. With proper understanding, and good leads, investing in real estate could lead to decent financial gains provided you know what to look for in the current real estate market.
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A very useful column in Mudah in order for future property search..