Welcome to the Seventh chapter of Investing for the future, these series of the articles focus on educating the community by providing basic to advance information on investment options available to Sri Lankans and encourage them to invest for a better future. We encourage you to read all the chapters before proceeding with the seventh chapter – Real estate investment, it will give you an understanding of investment options available and associated risks, please access the previous chapters using links below.
The seventh chapter of the series is all about real estate investment, Real estate is the property, land, buildings, air rights above the land and underground rights below the land. The term real estate means real, or physical property. Thus investing in a piece of land, house & building considered as real estate investment. It is not a high-risk investment, but real estate investment is associated with lots of legal and technical procedures thus it is not a zero risk investment as well, and investing in a property needs more careful approach compared to all other investment options we discussed in previous articles.
This article will be an introduction to the real estate investment and advanced information, tips and tricks will continue in the upcoming article.
How the real estate investment work?
The return on investment from a real estate can be derived in multiple ways, before introducing the methods, remember, real estate investment is not a “get rich quick “ investment, it needs planning and patience to reap the rewards.
A real estate investor can make money through rental income, property appreciation, and property trading or using the leverage to build positive net worth, however, the return depends on the type of the property you invested on
Types of real estate investment
Residential property – Property used for dwelling and housing-related purpose
Commercial property – property used for business, office and commercial purpose
Mixed development property – property used for housing and business purpose
Industrial development property – property used for factory, warehousing, manufacturing purpose
In our country, Buying a plot of land or house is considered to be the top priority of an average citizen, this is not only because they can call it home, but it is also because it will be the biggest investment of a person because it appreciates in value like no other investment. However real estate investment is not merely investing in a house or residing on it and calculating the appreciation, in this case, you are consuming your investment and presumably, the appreciation belongs to you.
As we mentioned earlier, wait for the next chapter to dive deeper into real estate investment and learn how to make real money.