Investing in the real estate industry is one of the hardest investment opportunities that investors fear. Many of them have not forgotten the losses they experienced after the industry faced extreme uncertainties and losses in 2008. However, the sector is currently booming, and a large number of investors are back. One of the most experienced real estate investor, Wes Edens, is back and has been sharing some tips about how investors should approach the real estate industry.
Wes Edens is one of the executive leaders at Fortress Investment Group, one of the organizations in the United States that has significantly invested in the real estate industry. One of the policies that the organization has been following is investing selectively in most of the real estate properties available in the industry. There are a significant number and categories of real estate properties such as buildings, land, and even luxury properties such as hotels.
Wes Edens understands that not all the real estate properties are beneficial to the growth and expansion of the company. Not all of the real estate properties in the industry are profitable. Most of the companies investing in this industry have been recording losses over the last few years. This is because they choose to invest in all assets that they come across. They have not been conducting extensive research to determine the income associated with a particular asset.
Investing in a majority of the real estate properties available is not a significant problem. The challenge emerges when an organization pays huge amount of money to a particular property that has a very long payback period. Wes Edens notes that most of the properties in the real estate industry are sold at very high prices such that it is challenging to get a resale value that would generate income to the company.
According to Wes Edens, it is essential for all organizations investing in the real estate industry to conduct a market analysis before they can choose any property to purchase. This strategy will enable an investor to gauge the profitability of a property, which will also be very useful in determining the payback period.