The Most Important Questions to Ask Before You Invest in Real Estate | Part 2
We’ve recently gone over some of the most important questions that one should ask before investing in real estate. In our previous article, we emphasized the importance of portfolio diversification, and why real estate can be a great option for investors, regardless of their knowledge and familiarity with the industry. Basically, even if you have no idea how the real estate industry works, you can still make it part of your investment portfolio, by either investing in REITs (real estate investment trusts), or by partnering with industry experts like the team at LUXred. However, if you want to learn about the ins and outs of the business, then you can take on a real estate project where you can be involved in every step of the process, like a design/build/sell project.
No matter the type of investment you want to make, there are various questions you should ask yourself before diving in and adding real estate to your portfolio. We’ve gone over some of these questions in our previous article, but we know that there are many more things to be said. That’s why we’re coming to you with more essential questions that an investor should ask before taking on a real estate project. If you have a question that you haven’t found in our articles, feel free to reach out to LUXred and get all the information you need.
1. How much should I invest in a real estate project?
Depending on the type of investment and the kind of property you want to invest in (commercial, single-family, hotel, condo or rentals, and so on), you’ll need to figure out your budget before making a move. The luxury housing market in Park City is highly competitive, and land prices are on the rise, so it will require a hefty investment on your part. However, keep in mind that the returns will likely be more than worth it, as demand for luxury, new-build homes in Park City is more intense than ever.
If you want to invest in a luxury real estate development project as part of a joint venture, you can partner with LUXred and join an investment group. Such a venture will require an investment of $125,000 or more, and our team will handle the project on behalf of the group. If, however, you want full ownership and control, you can choose to invest $500,000 in a luxury real estate development project in Park City, and LUXred will handle the process with you from start to finish. Whichever option you choose, we will guide and support you every step of the way, and you decide the level of involvement in the project.
2. What do I hope to achieve with my investment?
The type of investment you decide on will depend a lot on your specific goals. What do you hope to accomplish? Is it purely a financial or diversification strategy, or do you want to participate in the development process and learn the ins and outs of the real estate industry? Perhaps you’re motivated by adrenaline and enjoy taking on complex projects that require your full commitment. Or, perhaps you’re looking for a project that you can immerse yourself into, and maybe even bring your family or friends along for the ride.
Regardless of your motivation, LUXred can help you achieve your goals by allowing you to be as involved as you’d like. If all you’re interested in is portfolio diversification and profit, then you can leave the entire process up to us, and rest assured that your investment is in good hands. We’ll take on full responsibility and accountability, and handle your investment from start to finish, and a couple of years later, you get to reap the rewards. If, on the other hand, you’d like to be involved in the process, we’re here to guide and advise you along the way, from picking the right lot, broker, builder, and designer, to marketing the house for sale. The most important thing is to figure out what you want to achieve and how involved you’d like to be, and we’ll take care of the rest.
3. How long until I start to see returns on my investment?
Real estate development projects take time to reach completion, however, they bring handsome returns, especially if you invest in the right market. At LUXred, our focus is on luxury design/build/sell projects in the Park City area, an up-and-coming market that is currently luring investors like a magnet. Our process involves finding the right vacant lot for the development, facilitating the acquisition of that lot through trusted local brokers, obtaining all the necessary permits, selecting the right builders and interior designers, overseeing the construction process, and last but not least, marketing the property for sale. After all is said and done, the home will be sold to a lucky homebuyer, and profits will be divided.
Usually, design/build/sell projects take between a year and a half to two years from start to finish. We start marketing the property for sale before it’s even finalized, to minimize the time it spends on the market and ensure it finds the right buyer. We take full responsibility and are involved in every step of the process, participating in construction meetings and doing regular site visits to make sure the project is delivered on time and on budget. In the end, it will all be worth it. By betting on a high-potential market, your investment is guaranteed to yield a handsome return, with profits exceeding stock market plays, in most cases.
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.