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Real Estate Equity for Investors

ENDVEST Oct 2, 2015

When it comes to investing in the real estate market you have one of two options. There is the private market and the public market. Private equity real estate market investing is when real estate properties are purchased directly and owned or operated by the buyer(s) or a property manager. The purchase made in the private equity real estate market can be done as a sole buyer or with a group of buyers and can entail the investment in a single family home, a shopping plaza or an office building, basically any real estate structure that is privately owned and sold. The public equity real estate market entails purchasing a share or unit in a publically traded real estate company, such as a real estate investment trust.


In real estate, the term equity usually refers to the amount the property is worth once the amount still owed is deducted (usually the mortgage balance owed). The amount of equity one may have in a real estate property is often determined by several factors besides just the market value minus the amount owed on the mortgage, however. The most important way to determine a property’s ability to create equity in a timely manner is almost always location, and as with all real estate transactions the gains or return on investment are usually understood to be long term.


Even though the market value of the property is often mostly determined by location, equity can also be increased by the owner investing more money into upgrading or reconstructing the property in a manner that will attract buyers with features that they often deem desirable or maybe even essential. A nice home in a decent area that may be a bit outdated in such common areas as the kitchen and bathrooms, for example, offers a great opportunity to increase that property’s equity or value. Yes you do have to put money in to get more money out, there is no easy way around that. A property’s equity will usually grow naturally over a long time due to inflation, but to increase the equity in a shorter time span one of the most lucrative ways is to invest in property upgrades and even more important nowadays is to find a really good deal on a property that has great potential either in terms of its ability to be upgraded or possibly its location being in an area that is being restructured. The only thing one must consider as a negative in this situation is that an owner would not want to invest in upgrades that far outweigh the property’s capability as far as its potential return on investment. For example, putting in a high-tech kitchen with all the latest and greatest gadgets and high-end finishings may just be too much for that particular property or area as far as what future buyers would be willing to spend or can afford. Most often one cannot go wrong with increasing a residential or even commercial property’s equity by upgrading such common areas as a kitchen or bathroom, but the amount and extent of those upgrades should be seriously considered and weighed heavily against what that particular market is willing to support.


A real estate property in an area that is considered “up-and-coming” is usually a pretty good private equity real estate investment because the community surrounding it is in transition and hopefully, most likely, will continue to increase and create a faster-than-normal increase in equity. New businesses are coming in and property developers are building all around the property, often revamping a previously suffering area into a new, vibrant and desirable place to live or do business. These are definitely good investments as far as private equity real estate. Sometimes an entire neighborhood or area can be turned around in as little as 5-10 years, offering a real estate private equity investor a good solid investment opportunity. For more information and investment opportunities please refer to the Endvest.com website where you will find information, ideas, and most important possible investment opportunities you would likely not find on your own.