The prevention and treatment of real estate investment risks is to take corresponding measures and methods for different types, different probabilities and different scales of risks to avoid real estate investment risks or minimize the risks in the real estate investment process. . Below, the editor of Dongshi will teach you step by step how to prevent real estate investment risks. I hope you all like it!
Real estate investment risk prevention strategies
The prevention and treatment of real estate investment risks are for different types, Risks of different probabilities and scales require corresponding measures and methods to avoid real estate investment risks or minimize risks in the real estate investment process.
1. Investment diversification strategy
Real estate investment diversification is to achieve the purpose of reducing risks through the diversification of development structures. It generally includes investment area diversification, investment time diversification and simultaneous investment. etc.
Regional diversification of real estate investment is to spread real estate investment into different regions to avoid the impact of economic downturn in a particular region and achieve the purpose of reducing risks. Time diversification of real estate investment is to determine a reasonable investment time interval to avoid losses caused by market changes.
For example, when the leading indicators of real estate change significantly, such as economic growth rate, per capita income, and implicit amount, they start to rise from the trough of the cycle, loan interest rates begin to fall from the peak, and the land use rights transferred by the state start to rise from the trough of the cycle. The beginning of recovery indicates that the real estate industry cycle will enter the expansion stage. This is the best time to invest and you can concentrate your efforts on investment.
***Co-investment is also a commonly used method of risk diversification. ***Song investment and development requires partners to invest on the basis of real estate development, with benefits shared and risks shared, fully mobilizing the enthusiasm of all investors, maximizing their respective advantages and avoiding risks. For example, by cooperating with the financial sector and large consortiums, one can take advantage of their financial advantages to eliminate real estate financing risks; by forming alliances with foreign businessmen, one can introduce advanced technology and management experience and obtain preferential policies for real estate investment and development.
2. Investment portfolio and insurance
Purchasing insurance is very necessary for real estate investors. It is one of the main ways to transfer or reduce real estate investment risks.
Insurance is of great significance in mitigating or making up for the losses of real estate investors, realizing the circulation of funds, and ensuring the profits of real estate investors. It is especially important for improving the credibility of real estate investors and promoting real estate business activities. development has a positive impact.
Generally speaking, real estate insurance business mainly includes house insurance, title insurance, house mortgage insurance and real estate entrustment insurance. When purchasing insurance, real estate investors should consider several factors such as the types of insurance required by real estate investors, determine the appropriate amount of insurance, reasonably divide risk units and determine premium rates, and choose a reputable insurance company.
The real estate investment portfolio strategy is based on the risk level and annual profitability of real estate investment, and investors make appropriate and appropriate investments in various types of real estate in accordance with certain principles to reduce investment risks. investment strategy.
For example, real estate developers can invest part of their funds in ordinary residential buildings and part in high-end office buildings, etc. Because the investment risks of various types of real estate are different, the returns are also different. Investments with high risk have a relatively high rate of return, investments with a low rate of return have a relatively low risk. If funds are invested in different real estate developments, the overall investment risk will be reduced. The essence is to use individual real estate investments. The recorded income and expenses make up for the loss of low-yield real estate, and finally obtain a more average income.
The key to a real estate investment portfolio is how to scientifically determine the reasonable proportion of funds invested in different types of real estate.
Steps to prevent risks in real estate investment
1. Understand the market conditions and look for investment opportunities
Realizing returns from investment in the real estate market is based on market demand.
Funds invested in real estate will build houses that people need to buy. Only when there is demand for houses in the real estate market and the sales of houses can be realized, the investment of developers can be realized smoothly. Therefore, when investing in the real estate market, you must first have an in-depth understanding of the current market situation and estimate the market prospects.
To understand the current market situation, we must start with market research. Market research requires a full understanding of the types of real estate projects that the current market needs but is currently lacking, how big the demand is, whether the market is saturated, what the market's paying capacity is, what the competitiveness faced by enterprises is, and what is the future direction of the market. . Fully understanding the market is the basis for enterprises to estimate risks, rationally anticipate, and reduce cost risks. Enterprises should make rational decisions based on the market and find the best investment points.
2. Grasp policy changes and identify the investment direction
Currently, my country’s real estate investment is in a period of rapid development, and national and local government macro-policy controls are frequent, which requires real estate investors to Before making investment decisions, one should strengthen research on real estate-related laws and regulations, national tax policies, fiscal policies, monetary policies and other policies, and grasp the macro dynamics of national policies. Through the study of various policies, it not only helps real estate investment determine the correct direction of investment and development, predict the future more accurately, but also helps it timely adjust investment strategies according to policy changes and effectively control policy risks.
3. Formulate relevant measures to transfer investment risks
Investment risks can be transferred according to the relevant provisions of the contract, and some existing risk issues can be reasonably transferred within the scope of legal provisions. For example, risks such as price fluctuations of materials faced during real estate development can be locked to a minimum through the formulation of various terms.
Secondly, risk can be transferred through insurance to reduce the risks it bears. However, this method is not very widely used because it will be restricted and stipulated by various systems.
In addition, project investment funds can be securitized. The so-called fund securitization means that real estate companies use financial instruments to convert project development funds into effective securities. In this conversion process, the relationship between the developer and the project The relationship also changes at the same time, from a direct property rights relationship to a creditor's rights relationship with financial instruments as the medium, thereby realizing risk transfer.
4. Carry out reasonable financing and reduce financial risks
The amount of real estate investment is large, and financing must be used to meet its investment needs.
At present, the main methods of real estate financing include: issuing financial bonds through banks to raise development funds; raising funds through real estate pre-sales and obtaining house payments; using land use rights to apply for bank mortgage loans. Each real estate development company should choose the most suitable financing form based on its own actual situation in order to inject funds quickly, in large quantities, safely and at low cost. In addition, real estate companies must increase revenue and reduce expenditure, improve labor efficiency, and reduce management expenses to ensure that the invested funds obtain maximum economic benefits.
5. Improve the supervision mechanism and reduce fund consumption
Engineering construction is not only the consumption process of investment project funds, but also the completion process of engineering project construction. Since the main body of investment in real estate projects is separated from the main body of construction, the possibility of saving funds in this process is very small, but the possibility of increasing funds is very high. Therefore, risk management during the project construction process and completing the project on time with quality and quantity are a major problem for investors.
To improve the supervision mechanism for investment projects, we must first check the construction team and select construction companies with strong economic strength, strong technical strength, rich management experience, reasonable prices, high efficiency and good reputation through project bidding. team; secondly, the construction contract must be signed carefully, and legal documents must be used to protect the economic benefits of both parties to the contract and prevent moral hazard.
Finally, hire experienced project supervisors to comprehensively supervise and manage the project construction, strictly monitor the construction period, quality, and cost, coordinate the relationship between the construction party and the construction party, resolve conflicts in a timely manner, and prevent delays in the construction period. Condition.
6. Strengthen business management and avoid risks in various aspects
Project managers are the key to whether investment projects can achieve expected returns.
Improving the quality and level of management can not only reduce the risks caused by investment uncertainty, but also improve the efficiency of fund use and income levels, thereby reducing risks. In addition, rationally changing the business form, formulating a reasonable sales strategy, and using a variety of marketing methods can also avoid real estate investment risks in many aspects.