Strategies for Real Estate Investments

IF you have a few investments but have never tried real estate, it is best that you know the benefits as well as the possible headaches of this type of investment. Real estate can be a very good investment but depending on your goals and priorities, it may not be as easy as you expect it. It is not as simple as buying low and selling high and there are many factors that may affect its value.

Before investing in real estate, it is best that you know its nature and its economic and physical characteristics. Unlike the basic commodities that we consume every day, you should be aware of its characteristics for it is not as liquid as cash and should you suddenly decide to sell, a ready buyer may not come in as fast as you would expect.


Real estate is different from the other types of investments and has both economic and physical characteristics:

• Limited. The total land supply available is fixed. For an area, you might only have a few remaining choices for pieces of property that are well placed and constructed. As people buy real property, the number of remaining pieces of property available becomes less.

In investing, you should be fast in making a decision. If it takes too long for you to decide on a purchase, an equally interested buyer may suddenly buy the property that you want.

• Permanent. The improvements that you build on the property are permanent. Remember that should you decide to tear these down, you can no longer build these some place else. Make sure that you design well so that you can build well. Once you have the land improved, your capital gets tied up to it.

• Area Specific. The value of real estate can be very area specific. In Metro Manila alone, some areas are experiencing high growth while some areas had been stagnant for long. Many factors affect land value and you should be aware of these.

• Nonmovable. Land and improvements are nonmovable that can also have value implications. If suddenly you would have to relocate because of job and family situations, your investment cannot go with you. You might need the services of a caretaker to look after the property.

• Durable. Land is indestructible. Even if a fire eats up the improvements, it will still be there and remain yours and can still give you adequate investment protection. Protect it however from trespassers that may occupy and vandalize your property.

• Nonhomogeneous. No two pieces of property are exactly alike. Even if it were the same house model in a subdivision, each one is geographically different. This simply means that each piece of property has its own value character.

Look at highest and best use

When investing, always look at the best use for the property.

If it has the potential of a commercial property, using it for residentialpurposes will not give you the highest returns. By this, you will be able to position the property for maximum benefit.

Many potential investors have missed out on very good opportunities because of too much analysis. As soon as you feel comfortable on the investment after doing your analysis and calculations, then proceed with the purchase with due diligence.

If it is a good deal that you are getting into, more often than not, another investor is also aiming at the same property. Haste makes waste but you should also move fast in a hot property market.

Long-term investment

Remember that you will realize your gains after a few years and you might even lose money if you sell within a year because of the high transfer costs involved.

If you are investing money, make sure that you are willing to tie it for a while.

Final note: A profitable real estate investment requires a lot of knowledge about the process. It also asks you to be prudent and most of all, patient. Real estate appreciation takes time and the money that you will use will have to be tied up to the property for a while. When chosen carefully, it can give you returns no other investment can possibly match.

Reference: Alexis A. Acacio, Inquirer