Ryan Mahoney (Dubai, UAE) has been involved in many startup businesses in Dubai and benefits from extensive regional experience of the real estate industry. This article will provide an outline of some of the most important considerations for real estate investors to keep in mind when weighing up potential investment options.
In Dubai in particular, the real estate market presents huge opportunities for individuals seeking to generate passive income and build wealth. However, for the uninitiated, the prospect of investing in property can also be somewhat daunting, with many different investment options to choose from.
Buy and hold is a strategy that involves investors purchasing real estate and holding onto it for an extended period before selling it on for a profit. Investors adopting this strategy usually rent out the property on an annual basis, creating a consistent income stream until the time comes to sell.
Dubai’s booming tourism industry has driven rapid growth in its short-term rental market. Rather than a yearly tenancy, with this real estate investment strategy the owner rents out the property for a few days or weeks at a time or possibly on a monthly basis. This type of real estate investment is popular with investors seeking to generate higher returns.
As the name suggests, with the fix and flip strategy, the investor buys properties in need of renovation, carrying out the works before selling it on at a profit. This approach requires careful planning, as there are many potential pitfalls.
For those considering investing in real estate, there are several key considerations to weigh up. Arguably the most important factor for profitability in property investing is location. Issues such as the neighborhood and nearby amenities, green spaces and views can all have an impact on a property’s rental prospects and future salability.
Other factors for prospective real estate investors to consider are anticipated cashflows and profit opportunities; whether they wish to invest in a new construction or an existing development; their credit score; and the overall real estate market in the region they are considering investing in.
Investors also need to consider the investment’s purpose and their ideal investment timeline. Take for example buying and selling in the short-term, which typically involves purchasing a property under construction then selling it on after completion to realize a small to medium profit. Meanwhile, long-term buy and sell strategies generally focus on large intrinsic value appreciation over a long period of time, making them an apt option to compliment long-term financial goal, such as retirement.
