real estate investing

How to invest in real estate: 11 tips for success

Last Updated on May 15, 2024

With the interest rates at historically low values, more and more people are looking for a conservative alternative to fixed income and the best alternative is probably to invest in real estate.

Last year, the number of investors in Real Estate Investment Funds tripled.

The problem is these funds are not fixed income. In the event of an economic, financial or real estate crisis, it is better to have a physical property in your name than shares in a fund managed by a third party.

You can invest directly in real estate. You can form a group of friends and relatives to undertake in this sector.

Even with real estate bubble rumors for 2020, you need to be prepared to go shopping when prices drop. Downturns generate great buying opportunities.

11 Tips for Investing in Real Estate

With this in mind, I decided to write this article and I want to share with you a few tips to increase your chances of success on creating wealth from real estate investing.

1. Invest in land

investing in farm land

These are great generators of wealth. I met a retiree who in 1997 invested 10,000 euros in a piece of land. In 2012 he sold this same land 1.5 million euros to a construction company.

If it had been invested in funds it would have reached € 118 thousand, in savings it would not have exceeded € 39 thousand in these 15 years of application.

Investing in land in the vicinity of large capitals is a guaranteed value in the long run. This is because big cities are expanding horizontally at an accelerated pace.

There are also several ways to invest and profit from land in the short and medium term.

Many luxury condominiums all over the world are built in poor areas that have no value in the eyes of an ordinary person.

2. Invest in real estate in the plant

invest in real estate in the plant

In the last 4 years, many people bought real estate in the plant paying only 20% to 30% of its value to resell them 1 or 2 years after the beginning of the works with enormous gains.

This is possible with the use of the technique that allows multiplying profitability through indebtedness.

It is necessary to know how to evaluate the property correctly. Not every property in the plant is really advantageous when it is intended to sell it before handing over the keys to profit from the premium.

3. Invest in used real estate

It is in the mud that we find the diamonds. Right now, thousands of used properties are stranded in real estate. They are apartments and houses despised by the final consumer.

The prepared investor is able to identify these opportunities, polish these properties and then sell them with huge returns in the short term.

This subject is very interesting and profitable. It’s one of my favorite techniques because it’s so easy to do, it’s highly profitable and very fast to make a profit.

4. Invest in rental properties

The secret of the lease is in the correct choice of properties. There are great opportunities in different segments such as popular properties, flats, commercial rooms, stores, warehouses, vacation homes and hotels.

It is important to know each of these businesses. The best rental investment option may depend on the characteristics of the city where you live and your investor profile.

5. Build real estate to sell or rent

Here we have another machine to multiply assets. When you buy a finished property you are paying the cost of construction and the profit of whoever built it. And believe me, this profit is absurdly high.

I know a small merchant who, before retiring, bought land in a poor neighborhood in the city. He built a 3-story property with 9 small apartments. He invested € 500 thousand in the land and the work.

Before the works were finished, I had already rented the 9 apartments for €560 each. He achieved a great retirement. The investment guarantees a return greater than 1% per month and the building is now worth more than €1 million.

This type of investment is widely practiced by investors.

6. Invest safely

Investing in real estate can be risky if you don’t invest in knowledge first. Buying a property is not like buying a car at a dealership.

Courts of Justice are full of lawsuits against real estate developers and builders.

Large companies in the market are involved in cases of disrespect to the consumer. And what most generates these problems is the lack of information. Nowadays it is cheap to buy information, do your due diligence when looking into a seller or property.

7. The value of a property depends on its use

There are many properties near you that are being underutilized.

There are residential properties that are bad investments if they are acquired for residential use and great if they are turned into commercial properties.

The opposite situation can also happen. The informed and prepared investor is able to identify this type of opportunity that is difficult for the average consumer to perceive.

8. Investing with little money is possible

You don’t need to have a lot of money to invest in real estate. There are even those who invest without having any money through real estate financed and acquired through a consortium.

The use of leverage in the acquisition of lots within condominiums and properties in the plant are great strategies to diversify your investments in immobilizing a lot of money.

9. Investing using reason, not emotion

While most people buy real estate emotionally, driven by impulse, visual and sentimental appeals, the investor works rationally.

Turning overgrown land into a piece of paradise is the specialty of investors.

For a prepared investor, there is no bad property, no matter if it is inside a slum or in the most upscale neighborhood in the city. A good investment property doesn’t have to be beautiful and well located, it needs to make a profit.

10. Form or join an investment group

Do you have a lawyer friend? Do you have another friend who is an engineer or an architect? Do you understand finance? Why don’t you get your friends together and create your own real estate investment fund?

Together, you are big and in the real estate market this makes a difference.

There are groups of friends who come together to buy entire businesses at a bargain price because of their bargaining power.

Others prefer to come together to build and then rent.

Many subdivisions, commercial buildings and housing developments are the result of investments by small investors.

How many opportunities have you missed in your city in recent years due to lack of knowledge?

11. Always be learning

There are many good books on real estate investing but if you’re like me and don’t enjoy reading that much, i suggest joining the real estate investing sub reddit. It’s a group where people share their thoughts and experiences and there is always something new to learn.

My experience in the market

In the past 15 years I have worked both as a small real estate investor and as a realtor. I have never met anyone who has regretted buying a property. But I have met people who have regretted selling a property.

The biggest lesson i learned is that it doesn’t matter if the market is up or down, there are always opportunities to make a profit if you are patient and keep focused.

Read also: How to get rich.