Caspar Chou on How To Know When To Invest in Real Estate
As a real estate investor and developer in Alhambra, California, Caspar Chou has extensive experience in the field. Before investing in property, there are several key factors to consider. Simply investing in real estate that appears attractive or profitable is not enough to succeed.
The Planning Stage
Finding a suitable property takes a significant amount of planning. Before starting a new project, evaluate the pros and cons of specific ways to earn property income.
There is more than one way to profit from real estate. Less expensive properties in up-and-coming areas can be purchased and then immediately restored. “Flipping houses” is a common way to make money without renting the property.
Buying a property to rent is a way to earn long-term income potential. Before investing in a multi-unit property, investors should fully understand this process. Some investors can handle tenants on their own, while others may need the help of a management company. These costs are important to factor in before purchasing a property.
Prospective investors usually visit the property in person. While this may be difficult during the pandemic, an in-person viewing allows investors to have a more accurate idea of the property. In-person visits will show unfiltered investor lighting and details that virtual showings may not catch. Depending on the property, this can take one or two hours to complete once all the questions have been answered.
Popular wisdom says to budget more expenses than may be necessary. Hidden costs are bound to occur when buying even the “perfect” property. The initial cost of the property is only one expense. Inspection costs and maintenance and repair services are par for the course.
The Best Ways to Invest
Depending on an individual’s finances, investing can be best accomplished through several avenues. Since buying an entire property with cash is usually a rare event, other options are available.
What Are REITs?
Real Estate Investment Trusts (REITs) allow individuals to invest in a large-scale property without the physical real estate. A typical REIT is a company that owns apartment buildings or commercial real estate. Instead of developing property to resell, this is a way to operate the existing property.
Investors interested in renting a large-scale property will frequently look into this option. REITs help individual investors earn money without having to buy commercial real estate. This is accomplished by earning a share of the income through ownership.
About Online Investing Platforms
Online investment platforms exist to connect real estate developers with investors. This is one way to finance projects through equity. This method may work best for individuals who have earned an annual income of more than $200,000.
Real estate crowdfunding allows an investor to raise money from multiple people. By selecting a portfolio strategy, individuals can present their goals for potential funding. Before using this method, it is important to understand the risks. Because these are private investments, they are not as easily sold as public securities.
Are Limited Partnerships Worth It?
A real estate limited partnership is a way for investors to diversify their portfolios. Investors can merge funds with other investors to make expensive properties more affordable. Real estate limited partnerships will usually have a wide variety of properties available.
This arrangement does have a deadline. Caspar Chou has found that terms are seven and 12 years and come with their business plan. Once the properties are sold, profits are distributed, and the partnership ceases to exist.
How To Pick The Right Property
Before investing in a property, consider the location. The present location may appear one way, but the area could be entirely different in ten years. To understand how a neighborhood is changing, research is imperative.
Picking an area should be done before picking a property. Investors familiarize themselves with the location is to join online neighborhood communities. This takes significantly less time than visiting all neighborhoods and will provide a glimpse into how the community lives and their goals for the future.
Property taxes will vary depending on the area. Higher property rates may cost the investor more. However, it’s also an indication of long-term tenants. For investors who want to rent a residential property, this is ideal. For those interested in flipping houses, this can cost more than necessary.
Areas with high unemployment can be problematic for investors — they can give investors an idea about the economic situation in specific communities. Major companies infiltrating a town or city will increase the job market.
A prized location is close to amenities, has well-performing schools, and has some degree of nature. Residential properties within strong communities can indicate the longevity of their status. A neighborhood with empty lots or vacancies is not a good sign for future investment.
Caspar Chou assesses how the area will evolve before buying any investment. In most areas, potential investors can contact town hall to understand the prospects of a neighborhood better. This information consists of zoning and urban planning extending for years into the future.
When Is The Right Time To Invest?
Financially secure investors tend to make the best decisions. This does not necessarily mean a potential investor needs to be wealthy, but a well-researched plan is crucial. Potential investors who do not feel pressured to act on the first property within their price range are knowledgeable about alternative options.
It is ideal to invest in a buyer’s market. A buyer’s market happens when supply exceeds the demand resulting in a cost decrease for properties. Since the real estate market changes depending on supply and demand, this phenomenon will sometimes happen, even if it is currently a seller’s market.
Caspar Chou is familiar with mixed-use developments and is aware of trends and long-standing advice. Strategic planning is critical for the real estate industry and individual investors. By understanding the research necessary, potential investors can begin their journey.