Many investors fail to capitalise on long-term gains despite boasting excellent real estate assets. This is primarily due to their failure to integrate key investment strategies and as a result, they fall short of achieving levels of profits that have aimed to realize. Managing a real estate portfolio is a complex task and mandates adopting a comprehensive approach to maximize wealth generation opportunities.
Just like you need professionals to manage your money in the equity space, fund managers are required to ensure optimal returns in real estate. Professional real estate agencies thoroughly understand the sector and their ability to keep tweaking investment strategies as per changing business scenarios helps you stay ahead of the market. While a vanilla strategy is to simply hold the asset for long-term wealth generation in the real estate sector, here’s a list of proven ones that have never failed test of the time:
1) Diversify Portfolio: Just like the equity market, real estate favours investors who have put their money into different segments of the sector. By distributing the risk over several categories, the risk of suffering a substantial loss can be minimized. For managing wealth optimally in real estate, you should strive to invest in as many categories as possible. A portfolio with a healthy mix of investments in residential real estate (RRE) and commercial real estate (CRE) is a good starting point to minimize the investment risk. In addition, you can also choose to invest in infrastructure through the route of public-private partnership (PPP) to further spread the risk and maximize profit potential.
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2) Patience is Key: The real estate sector can multiply your investments to surreal levels provided you have the virtue of patience. The allurement of “buying today and selling tomorrow” to make “quick profits” is very intense and not many can overcome it to stay invested for the long term. However, the ones who wait patiently and stay invested for the long term emerge victor by laughing all the way to the bank. Remember, wealth management in real estate is a function of both market opportunity and patience and it’s a combination of both that will help you maximize your returns.
3) Personalize Approach: As the nature and purpose of the properties differ, personalizing investment strategies is key to optimum wealth management in the real estate sector. The strategies to manage RRE, CRE, and infra projects are comprehensively different and adopting a similar approach to manage these assets won’t yield the desired results. Personalization also allows for a more accurate and in-depth analysis of each property, thereby helping investors get optimized returns on their investments.
4) Insurance Cover: Real estate investment is not only about maximizing returns but also effectively hedging your invested money against potential risks. Insurance can prove instrumental in protecting your investment and its role becomes critical in helping investors recover losses from accidental damages, fires, thefts, and natural calamities among others. With a small annual premium, you can buy cover for your investment that is necessary for keeping your investment safe in the long term. Further, it is recommended that investors buy an insurance policy only after comprehensive research to select the best insurance plan that offers maximum coverage without any strings attached.
5) Tax Planning: By intelligently investing in different real estate categories, you can maximize tax efficiency and retain significantly higher portions of your income. Don’t hesitate to avail services of expert wealth managers as they are masters of their fields and can bring enormous savings by minimizing your tax dues. Many investment strategies can also help in reducing tax liabilities with staying invested in the property for the long term being one such significant plan. The longer holdings in real estate make you eligible for lower Capital Gain Tax which means you can save more money by reducing your tax liabilities.
6. Professional Services: Don’t underestimate the importance of a hiring professional agency to efficiently manage your real estate properties. Not only do professionals make the investment cycle a breeze they also help in optimizing returns by applying data-driven, time-tested strategies. A professional real estate management firm holds expertise in the investment domain and by managing the intricacies throughout the investment cycle; it can help investors to remain at the top of their games.
Optimizing wealth management mandates adopting holistic strategies to minimize risks and maximize wealth creation opportunities in the real estate sector. The key here is to bank upon seasoned professionals who have a proven track record of managing properties across segments of real estate. Such agencies offer excellent wealth management services and by personalizing their property management approach, they can play an important role in taking investment profits to a new high.
(By Ankur Jalan, CEO, Golden Growth Fund)
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