12 Tips for
Successful
Real
Estate Property Investment
Just because real estate prices seem to have
hit a temporary ceiling in many countries around the world, that doesn’t
mean that profits from property investments are hard to come by.
Even during a real estate market slowdown,
stagnation or depression, profits can be made locally and overseas. This
article shows you the top ten tips that real estate investors apply to
their property portfolio building strategy to ensure success from their
investments
1) Research the curve - the concept of a
property market cycle existing is not myth it’s a fact and is generally
accepted to be based on a price-income relationship. You will need to
check a number of basic criteria; Check the recent historical price data
for properties in the area of the country you’re considering purchasing in
and try to determine the overall feel in the market for prices currently.
Are prices rising, are prices falling or have they reached a peak. Check
the rental return curve, what is actually driving rentals, are they strong
or week. If returns are high then are they likely to continue high and for
how long. Check affordability which includes a combination of interest
rates, incomes and rent return. Divide the properties into 3 categories,
high price, medium price, low price, each category has it’s own cycle.
Check for potential over supply, are there many properties being built
now, if they are when is the expected completion date, are the new ones in
the price range you wish to invest. You need to know where the curve of
the property market cycle is at in your preferred investment
area.
2) Get ahead of the curve – as a basic rule of
thumb, professional real estate property investors seek to buy ahead of
the curve. If a market is rising they will try and target up and coming
areas, areas that are close to locations that have peaked, areas close to
locations experiencing redevelopment or investment. These areas will most
likely become ‘the next big thing’ and those who buy in before the trend
will stand to make the most gains. As a market is stagnating or falling
many successful investors target areas that enjoyed the best levels of
growth, yields and profits very early on in the previous cycle because
these areas will most likely be the first areas to become profitable as
the cycle begins turning towards positive once more.
3) Know your market – who are you buying
property for? Are you buying to let to young executives, purchasing for
renovation to resell to a family market or purchasing jet to let real
estate for short term rental to holiday makers? Think about your market
before you make a purchase. Know what they look for in a property and
ensure that is what you are going to be offering
them.
4) Entry costs – research fees, charges and all
expenses you will incur when you buy your property – they differ from
state to state.
5) Buying overseas or even inter state – Wait until
you have learned the basics in your own backyard so you instinctively
understand the impact of fees and charges on the cycle. Know what to look
for. InTurkey for example you should add on an
additional 5% of the purchase price for all fees, in Spain you will need to factor in an average
of 10% and in Germany fees and charges can be
in excess of 20%. Know how much you will have to incur and factor this
amount into your budget to avoid any nasty surprises and to ensure your
investment can become profitable.
6) Purchase price – set yourself a budget that
will realistically allow you to purchase what you’re looking for and
profit from that purchase either through capital gains or rental
yield.
7) Capital growth potential – what factors
point to the potential profitability of your real estate property
investment? Which economic or social indicators exist to suggest that
property prices in the area will increase? If you’re buying to let out are
there any indications to suggest that demand for rental accommodation will
remain strong, increase or even decline? Think about what you want to
achieve from your investment and then research and find out whether your
expectations are realistic.
8) Exit costs – if you will incur substantial
capital gains taxation liability if you sell your property investment for
profit, will that render the investment profitless? In NSW for example, if
you sell within 12 months you pay double the capital gains tax. Speak to
an accountant qualified in the area of capital gains tax and property
investing on how to best set yourself up to minimise capital gains
tax.
9) Profit margins – what levels of capital
growth can you realistically gain on your property investment or how much
rental income can you generate? Work out these facts and then work
backwards towards your initial budget to work out your potential profit
margins. At all times you have to keep the bigger picture in mind to
ensure that your real estate investment has good potential for
profit.
10) Think long term – unless you’re buying
property off plan and intending to flip it for resale and profit before
completion you should view real estate investment as a long term
investment. Real estate is a slow to liquidate asset, cash tied up in
property is not simple to free up. Take a long term approach to your
property portfolio and give your assets time to increase in value before
cashing them in for profit.
11) The benefits of NOT selling – Most
successful property investors do not sell property right away. They
actually hold on to them for the longer term and only sell in a rising
market to strengthen their position. They know that property purchased in
the right area at the right time in the property cycle will traditionally
double in value within 5 to 10 years. Check the numbers carefully on
buying and selling for quick profit v’s buying, refinancing and holding
for quick profit.
12) Leapfrogging – Seek out a mentor who not
only knows the leapfrogging principals but does them. Learn from them well
before you learn other strategies. Leapfrogging is very simple and very
powerful. It is a wealth creating vehicle for all and with time and timing
can make average people wealthy. It avoids the wealth sucking capital
gains taxes, maximises leverage and compounding, and allows continual
growth of a property portfolio so you can maximise the benefits of the
traditional doubling affects of property over time.
THE RESERVE BANK – It’s a
fact
"The Federal Reserve
will also get new powers to takeover any financial institution that is in
trouble."
The thing with this is that most people believe the Fed
is in fact federal...... so to the population this appears to be Obama
giving the Government more powers to take over private companies.. not a
private institution..
consider that.... a private institution who *prints the money* (and claims
to be 'not intending to make
a profit') now being allowed to acquire other private companies. What do
they 'intend' to do with those? can they still pretend to be
not-for-profit?
Its this subtle distinction that will have massive
ramifications.. unbeknownst to the "great body of people, mentally
incapable of comprehending"
who will "bear it's burdens without complaint." (Rothschild, 1913)
Offshore Service
Delivery
Finance - National Australia Bank
Rece$$ion Buster Humour
Two
women are new arrivals at the pearly gates and are comparing stories on
how they died:
1st woman:
I froze to death.
2nd woman:
How horrible!
1st woman:
It wasn't so bad. After I quit shaking from the cold, I began to get warm
and sleepy, and finally died a peaceful death. What about
you?
2nd woman:
I died of a massive heart attack. I suspected that my husband was
cheating, so I came home early to catch him in the act. But instead, I
found him all by himself in the den watching
TV.
1st woman:
So what happened?
2nd woman:
I was so sure there was another woman there somewhere that I started
running all over the house looking. I ran up into the attic and searched,
and down into the basement. Then I went through every closet and checked
under all the beds. I kept this up until I had looked everywhere, and
finally I became so exhausted that I just keeled over with a heart attack
and died!
1st woman:
Too bad you didn't look in the freezer. We'd both still be
alive.
