What is a real estate investment?

What is a real estate investment?

Shamir Kumar Nandy

We have heard for a long time that most of the people have been asking about property investment. Real estate investment consists of the buy, sell, ownership, management, rental of a property for profit. A property is an asset form with limited liquidity relative to other investments, and it is also capital in a term.

People who have their real estate investment property can be very beneficial and also can become the primary source for their income. This is because, with property investment, it provides for many people cash flow, bringing them with massive returns, even after all the bills have been paid. Those who own real estate investment properties have the privilege of controlling their success or their failure.

Although real estate investment is not a new focus for the people, there are still a lot of people who do not know what to do to start their property investment. 

Advice by Shamir Kumar Nandy on the essential things to look for in a real estate

real estate investments

1. Property location

Property location is one of the most critical things key to look for in real estate investment. It also takes the longest time to look for a great place. With a good property location, it may lead you with a great return in the future. For example, the land today is peaceful open land at the back of a residential building could someday become a noisy manufacturing facility so it may diminish its value.

Hence, property location is the long term view regarding how the area is expected to evolve over the investment period. Proximity to facilities, green space, and the neighbourhood’s status factor prominently into residential property valuations. If the property is close to markets, warehouses, transportation stations like MRT station, LRT station and others are also the critical role to value high in commercial property valuations. Before making any decision, people should review the ownership and intended usage of the immediate areas where you plan to invest.

2. Valuation Of the property

Real estate valuation is dependent on estimating the value of a property for a variety of endeavours, including financing, sales listing, investment analysis, taxation and property insurance. In Shamir Kumar’s experience, he advises that there are a few common methods used for real estate valuation:

  • Sales comparison approach: It is often used to compare the recent sales of new and old properties with similar characteristics. 
  • Cost approach: This method is suitable for new construction. The formula is the cost of the land and construction minus depreciation.
  • Income approach: This method is suitable for rentals based on expected cash inflows.

3. Know your investment propose

You have to understand the low liquidity and high-value investment in real estate as a lack of perspicuity on purpose may lead to unexpected results, including financial crises.

You have to identify what purpose that you are looking for then only plan accordingly. Here are some suggestions that might suit your purpose:

  • Buy and self-use- People who have their property. They will save on rent and have the benefit of self-utilization. This will get your property value appreciation.
  • Buy and lease- This is a long-term value appreciation which offers regular income, but the landlord has to handle those maintenance fees.
  • Buy and sell (long-term)- Basically, it focuses on enormous value appreciation over a long period.
  • Buy and sell (short-term)- It is a quick profit. The property is under construction and sold at a profit on completion.

4. Aware of leverage

Property investment is a significant amount of investment and also a long-term investment, so usually, people are taking loans on it. It may come at a high cost, although taking loans is convenient. Hence, people should know how to handle loans of this nature and avoid major pitfalls.

Buy and sell

Think wisely before making any real estate investment

Every investment has its own risk. Everyone should be aware of it and invest it wisely. It is vital to consider certain factors, no matter the terms and conditions, and other charges levied by the mortgage lender before you invest in real estate.

For more advice on property investment in Malaysia, you may consult Shamir Kumar Nandy at shamirkn9876@gmail.com.

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