The Most Important Questions to Ask Before You Invest in Real Estate | Part 1
Any investor, seasoned or unseasoned, knows that diversifying your investment portfolio is critical for success. Investing in one asset type alone is risky, and won’t bring you the returns you want, not to mention that the novelty will wear off fast. Depending on your personal preferences, you can mix it up and invest in the stock market, as well as active or passive real estate investments. Real estate is a solid investment opportunity, especially in the U.S., and one that can bring handsome, steady returns.
If you’re new to real estate investment, or are looking for the best way to maximize profit on your next real estate project, there are a few things you should ask yourself first. As an investor, you already know that asking the right questions can set you up for success, or failure, and can save you a lot of time and money. So, before you make a decision, ask yourself the following questions, and feel free to reach out to LUXred if you need more information.
1. Do I need to be familiar with the real estate industry?
People who are new to real estate investing will ask themselves these questions almost every time: how much should I know about the industry? Do I need to be a real estate expert to invest in this niche? What if I know nothing about how real estate works?
The good news is that you don’t need to be an expert in real estate to be able to invest in these types of projects. You can invest passively, in REITs or property portfolios, or work with a team like LUXred that can help you every step of the way. However, if you’re thinking of going at it alone, you will need to familiarize yourself with the workings of the industry. What’s more, even if you’re a seasoned real estate professional, you’ll benefit from working with a local expert who can advise you on the best investment strategy for you.
2. How much time and effort am I willing to put in?
One of the most important questions to ask yourself before deciding whether to invest in a real estate project is: how much time do I have? The answer to this question will determine the kind of investment that best works for you, namely passive or active. If your schedule is tight and all you’re looking for is diversification, then a good option for you would be to work with a dedicated team like LUXred, which can handle the entire investment process from start to finish. Or, you can invest in REITs (real estate investment trusts), either on your own or alongside other investors.
If, on the other hand, you want to be involved in the process, learn about the industry, and you get a thrill out of participating directly, you’ll have to be willing to dedicate a lot of time and make this investment your priority. You can become a landlord and benefit from a steady source of income, or try to flip a property on your own or with your family, but in this case, you will have to be knowledgeable about the industry and familiar with the local market.
3. What type of real estate investment is the best for me?
Real estate offers plenty of opportunities for investors, from hospitality, office and retail properties to multifamily, single-family, and even self-storage. However, investing in commercial real estate is a much more complex and risky affair. For investors looking to diversify their portfolio, single-family housing is the most promising option. Of course, in real estate, it’s all about location, so the market you choose to invest in matters just as much as the type of asset you pick. Your best bet is to bet on markets with high potential for returns, and Park City is the best example. The market has become a haven for wealthy homebuyers and investors alike, and competition for available properties is more intense than ever.
The high demand and low inventory has pushed home prices close to $3 million, which opens up incredible opportunities for investors. A design/build/sell project, which is LUXred’s specialty, is the best and most advantageous way to tap into the potential of this growing market. A project of this type guarantees handsome returns in just two years, and the best part is that our team can handle the entire process for you, from choosing the land plot to marketing the finished property for sale. You can simply be as involved as you like, while resting assured that your investment is in good hands and benefits from local expertise and experience.
If you’re interested in investing in real estate but not sure where to start, or want to learn more about the options available to you, reach out to LUXred and let’s work out an investment strategy that works for your unique goals and needs.