Finding the optimal real estate investment is conditioned by several important factors that must be met strictly each time an investment decision must be made. Although the perfectionism around some real estate investments is in big part just an illusion, investors can design a rules-based system that will help them decide where is the best place to put their money to work. Let’s analyze what are some of the critical factors as well as how real estate investors manage to consistently find good investment opportunities.
# Determine your Area of Expertise
The first thing an investor must do is to find out what are his strengths. Maybe he has experience in the stock market and thus investing in REITs (Real Estate Investment Trusts) would be an ideal approach. Knowing how capital markets work is an important asset for determining how market valuations could evolve over any given period.
Some may be well-qualified to operate in the residential real estate sector, or commercial real estate. Finding an ideal real estate investment will be determined by the current level of expertise. There’s no “Holy Grail” market sector where knowledge, hard work, and persistence are not required to succeed.
# Get Advice from a Mentor
When guidance is needed for a real estate investment decision, the best thing to do is looking for a mentor, and luckily there are plenty to choose from. One of the prominent real-estate experts is Ofir Eyal Bar, which holds a multi-million dollar property portfolio, and yet shares some strategies online and also teaches them to a group of young real-estate investors wanting to learn more about the markets and how to succeed. Same as him, other successful investors are committed to passing their knowledge.
“Working with a mentor is not a sign of weakness”, as Ofir Bar is stating, “but an indication for willingness to learn and evolve. Having done all the possible mistakes, an experienced investor can help others avoid doing the same bad decisions and thus accelerate the performance”.
# Analyze the Targeted Market
To consistently find ideal investments, it is important for an investor to focus on several markets and not operate globally. Each place has its particularities and as a result, how real estate performs might be influenced by completely different factors, country by country. An in-depth analysis of the targeted market is required, so the investor is able to understand what variables are influencing the real estate development.
# Focus on Long-term Macro Data
Real estate development is accompanied by economic prosperity. That means macroeconomics should be in focus for a real estate investor. Demographics is one of the most important things to analyze. A growing population means there’s going to be an increasing demand for jobs and thus more people will have money to spend in the future. This acts like a self-reinforcing cycle, supporting economic activity and growth in the real estate sector.
Infrastructure conditions or pending plans will also play a major role in determining the future outcome of the real estate. Real estate projects emerge where infrastructure projects start to be developed. At the same time, the tourism potential will act as an additional catalyzer, given the interest not only from the local population but from foreigners, as well.
Long-term growth happens when a certain set of conditions are met. Aside from the ones already mentioned, political stability and business-friendly regulation will be other important factors to weigh. Finding all of them in one place is not common, which is why real estate investors must make compromises. The bottom line, however, is that some countries manage to outperform others in terms of economic development, which is where investors should be looking for opportunities.