As the number of investors looking at real estate continues to grow it is sometimes difficult to know where to start and how to learn as much as possible in a short period of time. Even though experience is perhaps one of the most valuable assets for any investor there are guidelines you can follow to give yourself a head start. This then begs the question, would you subscribe to formal lessons in real estate investment and what benefit would they give you?
As with any investment market there is an array of different strategies you can use to maximise your potential return and also protect your capital. Many of the lessons you would learn in a “real estate classroom” may seem very straightforward and simplistic but actually having them in front of you can make a difference. Before you decide on any particular strategy you need to have a clear view in your own mind of exactly what you want to do, your timescale and your financial muscle.
It is only when you know what you want to get out of a real estate investment that you can then look at the various strategies which include buy to let, new developments, pooled investments and flipping to name but a few.
There are very few real estate investments which go perfectly to plan and do not encounter cost overruns. You can do all of the research, you can double check your figures but the chances are that something will crop up which could significantly increase your outlay. An educational course in real estate investment would allow you to look at various examples of years gone by to see what went “wrong” and why a particular forecast investment outlay might not go to plan.
You will quite often hear the term “headroom” which effectively means giving yourself a safety net between your forecast total investment and your financial boundaries. In the vast majority of cases this should allow you to go ahead with your investment without any significant financial pressures but if you ignore “headroom” there is every chance that you may be overstretched which could then impact your long-term investment decisions.
Learning from history
As we have no idea what will happen in the future all we can do is look back in history to compare and contrast different economic situations. Like any other investment market, the real estate sector is cyclical meaning that there are often excessive peaks and excessive troughs in market activity and performance. History does not always repeat itself, no two situations are perfectly alike but even if you give yourself an idea of a potential worst case scenario then at least you can prepare yourself.
It does seem crazy that many people jump into the real estate market with very little in the way of knowledge or experience. A simple short-term tutorial about the main aspects of real estate investment, market movements and perhaps more importantly what moves markets could prove priceless in the longer term. If you do not understand how the market works, how can you expect to make any money?