How to Make a Better Real Estate Investment Decision?
Buying a house has always been considered a good investment option but mark my words, not always. Why are you investing your hard-earned money in a home? Do you want to live in that home or have some other plans? Buying a home is definitely an amazing idea and worth it when you plan to rent it out to make steady income from it. Buying a house is definitely the largest purchase, you will probably ever make, so before going for it, you must be very sure about your financial situation and have enough in your emergency fund.
However, parking your saving in a home just because you are tired of paying the rent may not be a great thing. Why? In the following post you will get answer for your all questions.
Define Your Purpose of Investment
Money is a tool to perform a task in order to generate desired results. If you have money it does not mean you will invest it somewhere and get the desired item. You must have specific purpose in view before parking your money in an investment vehicle. For instance, you have bought a plot in order to support your child's education in future and it seems to be a wise decision as well.
However, when the time comes and you see that the cost of education is almost Rs2 Million and the value of plot is around Rs6 million. Is it a wise decision to sell this plot for your son's education? You may say no but the property owner has no other option.
Experts suggest not to forget that investment in property lacks liquidity so one should not invest his all money in one asset class.
In real estate sector, you cannot be millionaires overnight but most of the beginners invest with this mindset. They think property is a quick fix to their financial issues but the truth is that seeking short term gains in real estate is more about cautious planning and speculation than investing.
Property sector lacks the liquidity and hence the volatility of other investment vehicles. It is not easy to buy and sell property and getting rich in a deal. Everything takes time in this field.
Don't Bring in Emotions!
When it comes to buying a home, most of our purchasing decisions are based on emotions than logics. It may make sense when you are buying a family home to raise your generations. However, investing in a property for profit is something different. Therefore, when it comes to investment, do not wear your heart on sleeves and let your head rule in order to make a plausible decision.
Allowing your heart over head means you are likely to spend more on your purchase, rather than negotiating the best possible price and outcome from your investment goals that you must regret later. Beginners should always close the deal after conducting analytical research. Always think about the financial gains rather than deciding on personal feelings.
It means if you have money to buy a home to live in, it is definitely not a viable investment option but if you are planning to generate income stream from it, it can definitely become one.