Getting The Best Real Estate Investment

Getting The Best Real Estate Investment

 Getting The Best Real Estate Investment
Motives on Real Estate markets(1)
 The price movements in this market are usually slow and difficult to come by. A major factor behind this is the type of investors who put their money in the real estate markets. Therefore, an understanding of the real estate markets has to be rooted in an understanding of the underlying participants as well as their motives. We will have a look at these factors in this article:
Investment Motive
The most important feature based on which we can distinguish real estate investors is their investment motive. All investors buy real estate. However, not all of them do for the same reasons. Let’s have a look at the three major categories of investors in the market.
End Users: This is the most common category of investors that you will find in the real estate market. Usually people who buy real estate are buying their own homes. They have the intention of staying in the house for decades. This changes their outlook towards the investment. These people do not look at real estate as a purely financial decision. They look at it as a lifestyle choice. This is because they have to stay in that house day in and day out. Hence, factors such as lifestyle amenities available nearby as well as the distance it takes to commute to work become extremely important. The demand for these kinds of investors can be predicted based on where their job locations currently are or are expected to be in the near future.
Long Term Investors: Lastly, we have the long term real estate investors. Like the “flippers”, these people too invest in the real estate market to make money. However, their decisions are not short term. They understand that real estate is a slow moving, liquid kind of asset that steadily grows in value over a number of years. Many corporations are also present in the real estate investment business.
Degree of Control
The long term investor category can be further subdivided into two more categories. These categories are distinguished based on the degree of control they exert on the property in question.
   Motives on Real Estate markets(2)
Active Investors: Some long term investors prefer to manage the property themselves. They are the ones who conduct the repairs, find the tenants and rent out their properties. Also, they may be actively involved in the property management process and may visit the property several times to ensure that no damage has been carried out by the tenants. Since they actively participate in the investing process, they are called active investors.
Passive Investors: There are other long term investors which have the ownership of the property. However, they do not take interest in managing its day to day affairs. To do so, they either hire employees or they end up hiring professional real estate management firms. Since they play no role in maintaining the property, they are called passive investors. They just provide the cash flow for financing the property and make very few (if any) decisions regarding its management.

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