I talk a lot on this blog about property, property investment and entrepreneurship. Many people have asked me how to become a real estate entrepreneur, so I thought it might be useful here to lay out some of the best tips I’ve gathered during my own career.
Key to your journey into property entrepreneurship is knowledge. You’ll need to grasp the basics of property investment (I recommend sites like Investopedia – but look out for impartiality). You’ll need to follow the market – ideally calling on historical data so you can see the ups and downs. As we all know, the property market runs in boom and bust cycles; so it’s a good idea to aim to buy during a bust, hold onto a property and sell during a boom.
You’ll need to develop a plan, regarding whether you will keep hold of the property for the short-, medium- or long-term, whether you’ll live in it, rent it out or use it as a second home, and what external market factors might trigger your own ‘sell’ flags.
There are several great ways to invest in property. Such investment has risen in popularity so much over the last 50 years, that property is now considered its own investment class. Many wealth advisors recommend keeping a property as part of your well-diversified investment portfolio – and bricks and mortar are still highly regarded as a solid investment.
Will you invest to become a landlord? Renting is a way of generating extra income, but it comes with its own suite of costs, issues and potential pitfalls. Again, I can wholeheartedly recommend doing your research and ensuring renting a property is right for you. Don’t forget the rising number of property rental and servicing apps out there, as well as highly experienced property managers who can take away a lot of the headaches.
While not so very common in Dubai any more, ‘flipping’ was a common trait in Dubai’s last two property price surges, whereby savvy investors try to buy property at below market rate, sometimes fix it up and sell it for a profit. The most common type of flipping in Dubai involves making an off-plan purchase, before anything is even under construction, and then selling the property upon completion, or even before it’s even built. A short-term investment with some elements of risk, most off-plan sales by investors must meet certain criteria and conditions set by the property developers.
Another type of property investment, Real Estate Investment Trusts (REITs) provide indirect real estate exposure without actually owning, operating, or financing properties. REITs are formed when a corporation (or trust) forms to use investors’ money to purchase, operate, and sell income-producing properties. REITs are bought and sold on most major stock exchanges, like stocks and exchange-traded funds.
It’s a good idea for some to develop a niche. Something that you’re passionate about, like only investing in holiday homes, beach houses or forest huts…whatever your passion, you’d better make sure – again – to do your homework before deciding upon a niche investment area.
For me, a key element in your real estate investment strategy is to develop a business plan. This provides you with a razor-sharp mission, vision and helps you see an end result. You might think of it as creating a roadmap, outlining any business goals and your plans to achieve them.
Your real estate business plan should include market analysis and financial projections.
Entrepreneurship in any sector involves serious application, thought and planning. Entrepreneurship in property investment, more so – as you will be looking at long term plans, potentially large investments and shouldering a degree of financial responsibility.
However, I believe, with planning, time set aside for learning, and guidance from other property investors, wealth managers and realtors, you can soon enjoy your own burgeoning property portfolio.