How to Invest in Real Estate (in Times of Crisis)
There are three factors that determine whether a region offers excellent earning potential through real estate investing.
In this article, I want to talk to you about one of these factors. It is the one that generates greater opportunities.
It is clear that opportunities can arise in all regions of the country. They appear where you least expect them.
The problem is that not everyone can understand the same property as an opportunity. It all depends on your look.
Think Like A Real Estate Investor
The great truth is that there is no bad real estate in front of someone who has the appearance of an investor.
For the true investor, there is only property with an inadequate price. With an aim that is inappropriate for its characteristics or with its undervalued potential.
All property with a good price is a good opportunity since most can be work to raise the capital gain (valuation) and cash flow (income generate by the property).
What the layman sees as a marsh or arid land, the investor can see as a beautiful allotment.
What the layman sees as a big old house, the investor sees a small building with several rented kites.
Not always what you see when face with a real estate is what that property represents potential if it is acquire and well work as an investment.
If there is one thing you need to learn before you think about the possibility of buying a property to invest is that difference between the eyes of an investor and the eyes of a final buyer, the one that acquires for the purpose of living.
You do not necessarily have to like what you are buying to invest. A marketer, for example, is not requiring liking strawberries to sell strawberries.
This reminded me of a phrase by author Dale Carnegie that in one of his books says:
“I go fishing every summer and personally I really like strawberries with whipped cream. But I discovered that for some reason fish prefer earthworms. So when I go fishing, I do not think about what I like, I reflect on what fish like. I do not put a strawberry with whipped cream on my hook. What I do is put a worm or a grasshopper in front of the fish”.
This means that the real investor must put himself in the place of his future client. It does not matter the personal tastes of the investor in front of a property.
What is important is the feelings, needs and problems that your client needs to solve.
Every problem is an opportunity in disguise.
One of the problems that people need to solve throughout their existence is employment.
Among the several factors that can impact the supply and demand of real estate are the current job offer and future projections.
The greater the job offer, the greater the earning opportunities for real estate investors of all sizes, from small to large.
I have seen cases of people who become millionaires because they bought land near a region where a large industry was installing.
Even before the full implementation of the industry, individuals and companies begin to demand land of various sizes for the construction of condominiums, businesses and small industries that would provide services for this large industry that was installed in the region.
A vast land of poor and poor land for cultivation was purchase at an absurd price for the purpose of agriculture, except that the investor’s goal was to give another meaning to the great land. For that other purpose, that price was ridiculously small.
The land, which was bought in hectares, was sold per square meter.
With the introduction of industry in the region, the vast area turned into several small, affordable lands that catered to the needs of small buyers who would like to live on the roadside leading to the industry’s facilities.
This same example applies to urban areas. The expansion of employment in certain neighborhoods generates demand for a smaller real estate. And the demographic density of the region begins to increase.
Large and spacious old house is acquired with the aim of being demolished for the construction of buildings full of “tightening” (this is what I call the tiny apartments).
The logic is the same.
The investor buys a large corner house in a neighborhood with high verticalization potential by being in a region where trade and services are expanding.
It is precisely in times of crisis that this old and large real estate are more offer by people who did not have reservations to face the difficulties or simply by the fear of having their property depreciate.
Then, when the economy returns to warm up, this investor can use the well-locate land of the big old house to make its use more suitable. A partnership with a construction company can make the investor profit from the “sale of airspace” of the property.
Maybe you have never stopped to think about it. But apartments are an ingenious way of selling areas in the airspace of a well-located land. For this reason, building buildings are the source of great fortunes.
The most powerful man in the world today, the unfriendly Donald Trump has created his fortune by building apartments and hotels all over the world. Hotels and lodges are also real estate developments that blend services and rentals.
Recently he managed to conquer the property of his dreams: the White House.
Follow the money
It is important to realize that job creation in a region automatically produces an increase in demand for land lots. Newly built homes for sale and lease, commercial leases, apartments, kitchenettes, among others.
People migrate to regions where there are more jobs and higher income opportunities. Many cities across Brazil have emerged in the middle of nowhere after offering jobs in the area.
People are always on the go for work.
This is still a reality in Brazil, although in the belief that, in the coming decades. The search for a higher quality of life and a lower cost of living will tend to occur as some professional activities can be carried out in offices far from major centers.
Our population will continue to pay more and more expensive to live as close to the job as possible or fast access roads or subway and bus lines that offer the least possible route to employment.
This inevitably creates opportunities for anyone looking at real estate investor’s eyes. Especially in times of crisis and unemployment, when right properties can be purchased at better prices.
Before deciding to invest in a region to seize opportunities generate by the increase in the supply of jobs. Evaluate the enterprises that are being creating in the region. It is not every enterprise that is robust, and that really materializes.
Real estate investment is not for laypeople
In fact, real estate investment is a type of risky investment. It involves the activity of speculation, that is, you often need to know how to bet.
In case, the bet goes wrong, you will have problems if your goal was to have a return in the very short term.
There are cities in Brazil that suffered great real estate speculation counting on the construction of the major industrial complexes (mainly petrochemicals) that were frustrated during the current crisis.
Those who made investments thinking about the very short term had problems (lay and beginners).
Long-term thinkers now have opportunities because these short-term (beginner) speculators have lost money and offer their real estate at attractive prices.
In fact, the country will not live in crisis forever. Disasters follow cyclical movements. We have recessive moments and economic growth.
One is better to buy real estate, and another is better to sell. In times like the current one, where employment rates are low, people go through financial difficulties and need to sell their good real estate.
This can create real opportunities in your region. Also, these possibilities need to be explored.
Do not expect the “golden opportunity” to appear on ads on the internet sites, the billboard, or the leading newspaper in your state.
You need to broaden your investor vision to be able to see the opportunities that are right in front of you right now.
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