Profitable real estate investment with the investment pyramid

What is the investment pyramid and how to use it?

The investment pyramid is a model that ranks different types of real estate investments according to their risks and returns. It consists of Three levels: conservative, pushy, speculative.

death conservative level Include investments with the lowest return and lowest risk. These include, for example Residential rental properties in good locations or real estate fund. These investments Perfect for beginners or for those who have Safe and long term investment Requests.

death opportunistic level It involves investments with a higher return but also a higher risk. These include, for example Residential real estate to be upgraded or rented and consulting services. These investments require more Know-how and participationbut also offers more opportunities for growth and profits.

death speculative level Include the investments with the highest return and the highest risk. These include, for example Overseas real estate projects or micro flats in a central location. These investments are fair For experienced or brave investors Appropriatewho are willing to risk big losses.

death investment They can be used to strategically build and diversify your real estate portfolio. You must do the following rules watching:

  • One must always Start with the conservative level And do not move to the opportunistic or speculative level until you have enough experience and capital.
  • You shouldn’t put all your eggs in one basket, you should Combines different types of real estate investmentsto reduce the overall risk.
  • One should always have one Comprehensive analysis of each drug Do it before you buy it to avoid nasty surprises.

What types of real estate investments are there and how do they differ in terms of return and risk?

Real estate investments are financial investments related to real estate. There is Different types of real estate investmentswhich differ in return and risk. You can choose between Direct and indirect real estate investments He distinguishes.

Direct real estate investments They are those in which one buys, builds, rents or sells real estate. You have complete control over the property, but also the highest effort and highest cost. Direct real estate investments can be divided into different asset classes, such as:

  • Apartment as an investment: Rental housing units are a classic investment in the “Residential Real Estate” market segment. offer one Relatively safe and stable return Through rental income and appreciation.
  • Commercial real estate: Rental commercial real estate is an investment in the “commercial real estate” market segment. offer one Higher returns than residential propertiesbut also a Higher risk due to vacancies or loss of rent.
  • Project development: Project development is an investment in the “real estate developer” sector. You buy or develop a property with the aim of selling or renting it. offer one Very high yieldbut also a Very high risk due to market fluctuations or construction errors.

Indirect real estate investments are those in which one does not directly own a property, however involved in a company he, Who owns or manages real estate. You have Less control over the property, but also less effort and costs. Indirect real estate investments can be divided into different types of investment, such as:

  • Opening the real estate fund: An open-ended real estate fund is a investment funds, which invests in various real estate and sells shares to investors. submit one Moderate return Through distributions and price gains as well as a High flexibility through day trading.
  • Closed real estate fund: A closed-end real estate fund is one Gesellschaft (zB GmbH), He invests in a specific property and sells shares to investors. submit one High return Through distributions and sales proceeds as well tax advantages through consumption.
  • Real Estate Investment Funds (Real Estate Investment Fund): one REIT ActingSealshaft, which invests in various real estate and trades stocks on the stock exchange. It provides a high return through dividends and capital gains, as well as tax relief on gains from rentals or sales.

How is the property checked carefully before buying it?

Buying a property is a major investment that needs careful consideration. To avoid nasty surprises, you should Check the property carefully before buying. There are quite a few important aspects Note:

  • location, place: The location of the property largely determines its value and attractiveness to tenants or buyers. One must know that Development of the housing market and the public infrastructure information in the area. Also factors like Noise, traffic, neighborhood and environmental protection role play.
  • the state: The condition of the property provides information about renovation needs And Possible defects or damages. One should carefully examine the walls, ceilings, floors, windows, doors, built-in wardrobes, etc. also technical facilities Such as heating, water, electricity and ventilation must be working and comply with current standards.
  • the documents: Property documents included important information About the legal situation and financial situation Property. You should look at the extract from the land registry, energy certificate, development plan, zoning declaration (for condominiums), utility bill, and minutes from the owners’ meeting. also Any construction overburdens or polluted sites It must be known.

In order to make an informed decision, it may be helpful to have: n Real estate appraiser: to commission. This one can Objectively assess the value and condition of the property and identify potential risks.

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