Which Kind of Property You Should Choose in Real Estate According To Nick Statman

According to Nick Statman, the type of property to invest in real estate is one of the most important decisions that any investor has to make. It is expected that investment property will be a part of a large spread investment portfolio. Therefore, the type of property that you decide to go for should depend on the financial objectives that you want to achieve, the time frame within which you want to achieve these goals and your ability to handle any risks associated with the investment. Here are a few other main factors to help you identify which real estate investment is the best one for you.

Your Investment Goals

The type of property that one opts for will depend on the investor’s objectives. According to Nick Statman, some important goals to consider include the following;

·   Cash flow- This is especially in some forms of investment, such as single or multiple-unit houses or apartments, where cash flow is received frequently as tenants pay their rent. This is good for investors who want fixed monthly returns from their investment as opposed to irregular lump sums.

·   Profit appreciation – Other properties such as the land or flipping, where people buy a property to sell in the future, place their priority on the appreciation of the asset. These work for investors more interested in accumulating a long-term horizon in the market.

·   Tax advantage – You can benefit from tax deductions that you would not enjoy if you are using residential property for commercial purposes. Thus, if tax incentives are valued, then CRE is likely to be more preferred.

Your Timeline

It also depends on your investment time horizon, that is, the amount of time you expect to hold an investment. Is this going to be a flip where you buy the property with the intent of selling in less than a year? Or are you planning to keep the property for more than 10+ years? Nicholas Statman says there are also some things that you need to know about;

· Short-term – This involves getting quick cash by selling houses and entails more work than most other real estate investment strategies.

· Long-term – This type of business takes longer to generate profit. However, it does not need as much attention over a period of decades as does the short-term business.

Your Risk Tolerance

It is worth reproducing the old adage ‘there are no risk-free investments’ because all investments involve some form of risk. Determine how much risk you are comfortable accepting when investing in real estate

· Less Risky – Single-family house rentals are less-risk investments, particularly within stable residential areas.

· Higher-Risk – Distressed properties, development of land, and any investment that is speculative are much riskier.

The returns can be significant if one can withstand higher-risk projects both financially and psychologically. Or you may be in a position where you would rather rent a small single-family rental and have more stability.

Conclusion

In this case, considering the above information, there are several aspects that need to be considered when determining which type of real estate investment best suits your portfolio. When you describe your investment objectives, time horizon, and patience for risk, you are likely to get to that special house. According to Nick Statman, the secret lies in the wise selection, which is achieved by conducting extensive research to arrive at the right conclusions as per the investor’s overall investing plan.