Real estate investment is the process of purchasing, managing, and then selling/renting the property for profit. Real estate business has a market gap of efficiency in most of the countries because finding right properties in which to invest requires substantial efforts and is much time consuming as compared to other investments.
Once the property is identified for the investment, the second step is due diligence, i.e. investigating and verifying the status and condition of the property. They investors will also have to bargain on sale price and sale terms, and then he/she will be able to contract for the property sale. Real estate investors are obliged to work on risk management process related to the property selling and buying business, that include:
- Fraud Risks: Verifying owners and property insurances.
- Environmental Risk: Obtaining and testing environmental contaminants, such as paints, leakages, and other breakages.
- Market Risk: Evaluating market potential to ensure that the value of property will not decrease in future.
On the other hand, real estate development is a multidimensional business, comprising activities of renovation and re-leasing of existing properties. Real estate development is significantly different from real estate investment or construction, even though many developers are constructors as well.
Why real estate investment matters?
- Tax Relief: Real estate provides immense tax-efficient investment. The depreciation of properties may allow you to collect income on rental basis at a very favorable tax rates.
- Ongoing Income: It is the major advantage of real estate investment that you can derive earnings from renters’ monthly rent. It serves as an additional income because the value of your property would not diminish by renting it out.
- Significant equity leverage: Commercial real estate investment is characterized by the ability to put debts on the assets. This allows investors to buy more assets with less cash and gradually add value in equity as the loans paid down.
- Legacy goes on: Real estate investment is a kind of investment that after your burial, your inheritance would be benefited from the property in which you had invested once.
- Security advantage: It has intrinsic value in terms of land and the structure built on it. By targeting perfect location, investors have the opportunity to get benefitted from the potential of the property.
Memorandum presents trusted community of real-estate developers and investors, sharing their knowledge, expertise and experience to help explore property management opportunities and threats that can occur down the road. Our realtor community is highly well-versed to manage and resolve all the odds and evens related to property or tax management.