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Investing in the Real Estate Sector – Are There Still Growth Opportunities?

real estate investors

It is striking how different investors deal with real estate investments versus investment in financial assets, whether funds, stocks or other products. And that differential treatment can lead to making them confuse their long-term financial planning goals.

Why is an investment in real estate different? According to Maritime Capital it is because many small investors are generally not very clear about their investment parameters nor do they fully understand how to properly determine which are the best segments to invest in the real estate market, which is vast and with a surprising variety of assets. For the small investor it is almost all practically the same; a brick is brick.

What do investors think?

But what does the small investor think of this security? The great disadvantage of ‘brick’ versus any financial instrument investment is that the small investor never knows the current value of their real estate investment in a reliable way. At most, they might have an idea, but they do not know exactly what their investment is worth. Until 2008, it was generally accepted by investors that brick "always" rose, except in periods of crisis, although previous crises had not been as deep as the one that occurred that year. So, investment in brick was considered good, as it rose rampantly and could compete with alternative investments in the stock market, but with the added "security" that gives the investor actual real estate, something they can "touch".

The bubble burst!

However, investors have now woken up from the dream of rampant rising real estate prices. Currently, there are areas of high demand, once again registering price increases due to demographic pressure. But most provincial capitals, especially smaller ones and smaller cities do not have that pressure, as there is still a lot of real estate stock, not just in the hands of banks, but people who want to sell their flats and houses but cannot because they want to recover a price that is no longer valid in the market.

What to do?

Many small-scale real estate investors are still plagued by two key dilemmas: to not take the money wanted because there is no demand currently (actually there is demand but at a price that they do not want to sell at because they do not want to recognise the loss of value, which is very real in many cases) or to sell it, but then do what with the money received?

The answer is simple. If it is money that you do not need you can look for financial assets that will insure your income, or in some cases, guarantees you an appreciation of your capital in the long term.

However, there is good news. There are many potentially lucrative investment opportunities in retail investment, urban regeneration projects and other specialised real estate development segments. Seeking advice from insightful experts who can point the way to better and more profitable real estate deals in the future is highly recommended.

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