People who shy away from real estate investments have probably seen or heard something that made them sceptical about them. In this article, we tackle some common myths about real estate investing to help you gain a better understanding of real estate investments.
Myth #1: You should invest in properties closer to home
Some believe that it is best to invest in properties that are located in areas that you are most familiar with, especially where you live. For most of us, that would mean limiting our investments to real estate in Singapore, Malaysia, or Southeast Asia. Proponents of this school of thought say that investors, are likely to be more familiar with the local property market, compared to that in a foreign country.
False! Even if it is more reassuring to have your investments physically closer to you, when the time comes to grow your real estate portfolio, it might be difficult to search for better opportunities within your current location.
Real Estate co-investing platforms like RealVantage specialise in properties in the U.K., U.S. Australia and Singapore markets. These are markets with a strong regulatory and legal framework, sound market fundamentals and good liquidity. If you are looking for robust analyses on these markets and sectors, look out for RealVantage’s in-depth market perspectives and investment strategies. If you are just getting started in real estate investing, check out RealVantage’s insights for a comprehensive glossary of real estate need-to-know concepts and definitions.
Myth #2: You will need to become very rich before you can get started
Many investors think that real estate investments would require a large capital outlay. To these investors, being able to afford the downpayment and having enough funds to finance the property make investing in properties seem like a very demanding decision.
False! Depending on what you are investing in, you may not need a one-off lump sum to start off. The great thing about real estate is that there is no lack of options available. Looking to start small? There is always real estate crowdfunding, where various investors pool their funds to raise capital for a property project.
Explore real estate co-investing platforms like RealVantage, which allows you to fractionally own properties across different markets and sectors with a lower capital outlay. You can decide what properties, geographies or stage of the property development lifecycle that you would like exposure to and how much you are comfortable to put in– it is all up to you.
Myth #3: Investing in real estate is an express ticket to a fortune
Real estate moguls with six-figure incomes are often portrayed in the media, as making millions of dollars off their successful property investments. Especially for fix-and-flip properties, it looks like a sure way to get rich quick by timing the market through a buy-low-sell-high strategy.
False! Investors are fixated on the potential returns they can make, while turning a blind eye to the inevitable risks. Just like the stock market, the property market is seasonal and cyclical. During a downturn, poor asset management and decision-making could cost you your life savings.
For those with a smaller risk appetite, real estate co-investment platforms would make more financial sense. Built upon the philosophy of calculated risk management, RealVantage focuses on providing risk-adjusted, non-exaggerated returns to the real estate investing community. Stringent due diligence is conducted to identify possible drawbacks and risks in a deal, such as stress tests on leverage limits, market demand and refined exit strategies. These valuable tests help to size the risks and to develop mitigation plans so that you can capitalise on market cycles while sitting comfortably on the risk-return spectrum.
Myth #4: Location is everything
Many people would say that this is true in order to reap rewards from your property, and that you should really focus your attention on developed areas and bustling neighbourhoods. In Singapore, mature estates in the heartland areas are highly valued, given the close proximity to amenities and the ease of commute.
False! Even though there is some truth to that, emerging markets could potentially offer a better return on investment instead, especially if projected growth is on the horizon. Urban areas might not see the same returns, due to higher costs. In addition, other factors like leasehold, economic climate, and interest rates, can also have an impact on the value of your property.
Before committing to a real estate deal, it is necessary to do your own due diligence. Researching on the market’s capital growth potential and sourcing for value-driven opportunities are a critical part of the investing journey. Thankfully, this can all be done effortlessly now with technology. Having deep capabilities in both fields of real estate and data science, RealVantage leverages technology to drive operational efficiency and decision-making strategies. That way, the opportunities provided to you are grounded on facts and data-driven insights.
No two investments are alike
When venturing into real estate investing, it is important to remember that every real estate development is unique and different factors can lead to price shifts and value fluctuations. At RealVantage, real estate co-investing is made simple. The team also continuously sources institutional-quality investment opportunities across markets, bringing you well-vetted real estate investment offerings, while taking away the hassle of asset and property management from you.
So, get started on building your global real estate investment portfolio with RealVantage today.