Why Investing In Real Estate Needs A Lot of Understanding?

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by Haris Shah

Today I am delighted for connecting with the people of Kashmir and putting forth the basic and useful knowledge regarding the Real Estate sector and the types of investors. The people of Kashmir have always expressed their interest in the property market, as we all are aware of the fact that Real Estate Investments are the safest and the most profitable ones.

Rebuilding going on in Srinagar’s Jawahar Nagar, one of the major areas that was devastated by the floods in 2014. KL Image: Bilal Bahadur

Kashmir has a huge potential to make a significant mark in the real estate sector and the people of Kashmir have always been positive about the real estate investments and have not hesitated to make an investment in the property market all across the globe. Today in this article let us know and understand more about the real estate and its investors.

Real estate is a property made up of land and the buildings on it, flora and fauna, livestock, water and any additional mineral deposits. Real estate is a tangible asset and a type of real property. Real property examples include land, buildings, plus the rights of use and enjoyment of that land and all its improvements.

Real estate has three basic categories: residential, commercial and industrial. When it comes to investing, residential real estate is less expensive and more feasible for individuals. As an investment, real estate offers income and capital appreciation.

Real estate markets are complicated. The price movements in this market are usually slow. 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.

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.

Speculators: These are the kinds of investors that are not actually “investors” in the first place. They give a bad image to real estate investment. This is because if you listen to them and believe their claims, they will make a sophisticated operation like real estate investing sound like a no brainer. Simply by flipping real estate, they claim to have made a million dollars without investing their own money. But if we look at the facts such results are never achieved.

Real estate investment is a slow and long process or we can put it this way: Real estate is an old school investment game, which only pays off in the long run. Most of these speculators are either people trying to make quick money by flipping real estate or people who have fallen prey to these con men and are actually trying the short cut method and short-lived strategy. Such kinds of investors were hard to find just a few years ago. However, now they have become a lot more common.

End-users: This is the most common and talked about the category of investors that you will find in the real estate market. Usually, these kinds of investors are buying their own homes. They want to buy a house with the intention of staying in the house for decades. This changes their outlook towards the investment. For them, the real estate is not a financial decision. They look at it as a lifestyle choice and their requirement. 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 their job locations, family, friends and the most important factor will be the budget set for buying a house.

Long-term investors: Lastly, we have the long-term real estate investors. They are the kinds of investors who actually build a lot of wealth through real estate by being consistent, patient and keeping long-term goals in their mind. Like the flippers, these people too invest in the real estate market to make money.

Haris Shah

However, their decisions are not short term. They understand and know that real estate is a slow-moving, illiquid kind of asset that steadily grows in value over a number of years. Long-term investors are the ones who go the long way and make a fortune for themselves.

In today’s article, we have now got an idea about the Real Estate industry and the types of investors. Many people would have been keen to invest in the property market but definitely there are questions popping up in their minds, what kind of investments would be beneficial for them? Which real estate market to look for? How to invest there? What are the benefits of making real estate investments? And in what ways real estate investments will turn out to be more profitable for them. But without an appropriate answer, no question is born. Let’s know which investor category we fall in and lookout for the best suitable real estate investment opportunities in the markets.

(Promoter of Better Homez, the author is a real estate investor and certified real estate professional. The opinions expressed in this article are those of the author’s and do not purport to reflect the opinions or views of Kashmir Life.)

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