Investors are known to display disparate personas. Not all will be attracted to the same kind of assets; some look for a passive investment, where they have little involvement with their properties, while some would be more meticulous in managing their property; Some will have a higher risk tolerance, with an objective of obtaining a higher income, while others are income oriented and prefer lower risk investment where the return comes primarily from cash flow from operations. Others within the higher risk tolerance group, may be happy with no cash flow at least initially and prefer properties with potential for rapid appreciation.
The conservative investors like the idea of investing in commercial properties for example either in a large warehouse or an office building. They would look for a long term rental – for 10 to 15 years or even more – in a Class A building and with a high profile tenant.
That looks like a good choice, but what happens if the tenant goes bankrupt like Jaypee Infratech or Essar Steel or moves out after 15 years? This investor will find himself with an empty building that must be sold or leased. Those Investors may have been happy for 15 years, but large buildings take much longer to lease or sell than smaller ones.
Basically investing is the analysis of risk and potential returns represented by rentals and appreciation of the property. Although successful investors are skilled at recognizing value and predicting trends, the real secret of success is in knowing when making an investment is worth the risk. While some people think you can boil this down to a science – to personal discipline, organization and knowledge, we believe that for a great part it is an art too
We are referring to our ability to find capital, the perceptive instinct in identifying a good deal, or your ability to develop a vision for the property and also a sense of which location will work or not. Personally we believe that the most important ingredient is the courage to take risks. Indeed there are many ‘would be’ investors who can be never go beyond the analysis paralysis stage.
To become a successful investor and a satisfied one you need to make wise financial decisions and also understand your own investor profile so that you invest in properties that suit your style. To do this it is important to build an investment plan that out lays out your investment criteria before you buy your first- property.