Financial Health: The Foundation of Real Estate Investing

Real estate is one of the most profitable investments that you can make, as it has the potential to give you excellent returns on your money.

Investing in real estate is not just about buying a property and waiting for it to appreciate in value. It’s about understanding how the market works, finding a good deal, and then holding on to it for as long as possible.

The foundation of real estate investing is to buy low and sell high. When you buy a property, you want to buy it for less than the market value. And when you sell a property, you want to sell it to make a profit.

The key to success in real estate investing is understanding how to identify a great deal and knowing how much risk is involved

We will talk about some of the things that you should consider before investing in any property.

1. Finding the property you want to buy 

The first layer of your foundation in Real Estate investing is finding the property you want to invest in. Real estate investment can happen in different ways and you have to ensure that you find a great property to purchase. 

When doing this, there are a number of things to take into consideration such as the location of the property, the size of the property, and even the way it looks. All of this goes a long way in ensuring that you get good returns on your investment. 

2. Research investment options and understand how to calculate the investment

After finding a suitable property, the next thing you need to do is to research the investment opportunities that are available for the type of property you purchased. For residential properties, you can charge rent or a lease. Do the same for commercial, landed or industrial properties. Once you have achieved this, the next thing to do is calculate how much you make on investment over a feasible period of time. 

This way you have a clear overview of the ways your property can be used and the profits you can make. 

3. Consider your risk tolerance and risk-reward balance.

There is no form of investment that is easy. This is why knowing your risk appetite and staying within your comfort zone is the wiser choice when it comes to investing. You can invest as much as you are comfortable with but always have at the back of your mind that investments can either lead to profit or a loss. When choosing real estate to invest in, at the back of your mind that you could experience a loss, it would be best to invest with money you are comfortable losing. However, getting the right guidance goes a long way in making the best investments. 

4. Invest in affordable, quality real estate 

In your bid to get a great deal, do look out for the property that you can afford and are worth the money.  Make sure that you never overpay for a property. The one way to avoid this is to work with professionals and do your own research. Learn the overall market prices for different types of properties, by doing this you are arming yourself with very important knowledge to protect your investment. 

5. Know your legal obligations

The purchase and sale of Real Estate is typically bound by laws that are particular to different countries in Africa. Before making an investment in any property it’s best that you learn the legalities that dictate the ways real estate can be purchased or sold.  Refer to our previous blog post for some insight into some of the documents you need to purchase property in Africa.

Investing in real estate is a great way to build wealth. It is one of the best investments you can ever make. However, knowing the types of properties you’re interested in, understanding your risk tolerance and making the right decisions are all important factors to consider when buying or selling a property.

Get in touch with our expert team for more advice on real estate investment opportunities in Africa.