Unlike the stock market, real estate is not a “we win some we lose some” investment. It’s a “Play to win” investment. The “win some lose some” approach is what most first-time buyers adopt while investing in real estate, and end up losing money. Investments are mostly random, through hearsay, and hence erratic and uninformed. This transpires with losing faith in the industry and consoling ourselves with the quote “ Real Estate is not just for me”.
That needs to change. We need a “Play to win” approach when we buy.
What is the difference? Being informed and hence making a prudent choice. So what is the criteria to identify a good investment for the layman?
Price: The most important criteria to survive any type of volatility is a good purchase price. Talk about buying price, on the macros, if the location is good, and the timing is perfect, make sure, on the micros you are in best price band. Buying cheaper than all the others in and around our intended area of purchase, comes with an assurance of early exit. Holding on to your money till you achieve an aggressive price offer now becomes the key. When the markets support the sellers, learn to hold money and await the right price opportunity. If it’s a buyer’s market, squeeze as much as you can, and deal only with the intention of buying tomorrow, until something really exciting comes your way. In both markets, on a negotiation table, always remember, if the deal strikes great. If it doesn’t even better, as tomorrow is another day.
Timing - The right time to enter and exit is another promising criteria, and if you are on the right side of the market, when the market mood is upbeat you will reap ROI beyond comprehension. Remember, WHEN THERE IS FEAR BE GREEDY AND BUY, AND WHEN THERE IS GREED, YOU MUST FEAR, FEED YOUR INVENTORY TO THE GREEDY AND EXIT.
Developer Financials and Project Financials: Developer financial strength plays a very important role in terms completion of the project. It also plays an important role in determining the ability to deliver a quality product. Usually, poor management of cash flow ends up with stalled projects or projects where quality/lifestyle of the project is compromised. Buying is like fishing. It is a game of patience and the one who is the patient gets the best catch. So wait there with your monies and you shall get the right deal. Always remember, it is great if we got the deal we looking for, if not, it never means the end of the world. There is always one waiting around the corner.
