Key Opportunity

Although current property climate in the US is not so encouraging for short term investors; with shrewd planning one can still manage to reap profits.

The key parameter today is location, places like Florida and Vegas will always attract tourists and they hardly ever have an off-season. As you would see once you get into the property market, the off-plan prices are always lower than the completed projects at comparable locations with similar scale of development. This has given birth to the “flip” investment strategy, where the capital investors sell off the unit prior to project completion. They basically rely on the appreciation of value as the project nears its completion. It is therefore important to get the terms and conditions of re–assignment of property clarified before you enter into the deal. At times, the trade-off for the power to reassign is a charge to be paid in form of a certain percentage of the purchase price.

Timeline

Payment terms are flexible and are designed to give the maximum benefit to investors, who are provided the ease of payment in installments. Another popular scheme allows payment after the completion of project with a token amount to be deposited in the beginning. Of course, the earlier the investment is made, greater are the returns. Early birds have the first choice of units in the project; hence they can choose the one which is most likely to attract the buyers.

Risk Management

Risk management is probably the most important facet of any investment. The investor will always have a range of choices in front of him. The key is to rate each opportunity in terms of certain pre decided parameters like appearance, location and facilities; and then evaluate each investment opportunity.

Before entering any deal, the foremost step to take should be deciding the exit strategy. Investors need to formulate a plan to liquidate their holdings as and when they want. In case a buyer is not found till the completion of property; investors should have a back-up plan.

ROI

The economic crisis has affected the short term return on investment to an extent. The recovery, although on cards, will still take some time. In fact, the current market is perfect for long term investment. This will ensure substantial capital returns apart from a steady flow of rental income. The investment’s profitability can further be increased by spotting an opportunity early on and reserving it at pre-release stage at a discounted price.

• Written by Sankalp.
• In category Other.
• 15 years ago.

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