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4 Growth Tips For New Real Estate Investors

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All phases of the property cycle deliver up buying and selling opportunities for astute property investors. As a new investor, your knowledge and network, i.e. connections with professionals in the property market that is your guiding force when it comes to buying or selling houses. When you’ve gained experience, you can use your own proven methodology and risk profile to determine your next moves in the property market.

Property – A Safe Investment

While you might have heard that real estate is the safest form of investment, lots of people make bad decisions and end up losing money.

For many who get into the business with the sole intention of making money, it’s easy to lose focus and get sidetracked from what rental properties are for – to provide shelter to people who don’t have their own home.

If you’re just starting as a property investor, don’t get too distracted with how much money you’re going to make from the activity.  We urge you to follow these recommendations so you can reach your goals and be proud of your choice of investment.

Start Small, Do It Locally, Grow Slowly

The first thing that you need to keep in mind is the fact that you have to keep everything in perspective. While it’s easy to believe you can make huge profits overnight in reality, there is no such thing. It makes great headlines, but in reality, every business or investment success is years in the making. To weather market fluctuations, and move ahead in property investment will need your time and resource, as well as education and experience.

The first property deal

The worst thing that can happen to you is that your first property deal is one out of the box, i.e. you get lucky early on in your investing. If this does occur, be wary and avoid thinking you’re untouchable and whatever you do, and every property investment decision you make will work out.

See your luck for what it really is – and use good judgement in your real estate investing transactions.

Start small with one property deal at a time and buy in your local area, where you already know the basics of location, and which areas are average, good and top-rate.

Experience is earned

With experience comes confidence and you will know you’re at the point of being able to take off your training wheels when at a moment’s notice you can in your head calculate the yield of a property. At this point in your investing career, you may be ready for other investment strategies and investing outside your local area.

For example, most investors start with a modest ‘buy and hold’ property that breaks even, i.e. the rental incomes covers expenses. In time there’s an increase in property values, and with the mortgage reducing equity is growing. Using the equity as a deposit for the next investment property purpose is growing small and ‘organically’.

However, Rome wasn’t built in a day and nor should your investment portfolio if it’s to stand the test of time, i.e. perform in all stages of the property cycle when it’s a boom or when it’s a bust.

One step at a time

The point of starting small is to get to understand all the know-how of real estate. If you start handling too many projects at once, you will never be able to carry it off. Use the one strategy to get established then consider other options. For example, use the buy to rent strategy and then, later on, consider the do-up property for holding and adding to your property portfolio or for sale for a profit.

Even seasoned real estate investors have a hard time handling multiple projects using different strategies simultaneously – unless they are professionals and it’s their ‘job’. So, you should grow at your own pace and take things slowly. There is nothing wrong with closing only one project if you are learning along the way.

Understand The Business, Engage Experts

Property investment is a business insofar as whatever you invest in, and the overall portfolio must be sustainable with ample cash flow and asset growth, i.e. capital gain in property value, just like a business you need to use expert service providers.  If you’re not an accountant and you’re not good with numbers, do not manage your accounting and tax returns – use a qualified practising accountant.  Use a lawyer for the property transactions.  Some new landlords think managing the rental properties is a passive role; however, it’s far from it.

For example, a property management firm needs to know clauses of legal contracts of leases or tenancies.  They also need to do regular site visits and provide status reports on the property, i.e. maintenance requirements, compliance with the lease or tenancy rules and regulations.  If you’ve purchased a flat, condo or apartment in a block there’s the body corporate aka condo association and specific fire risk assessment for flats.

To fall behind in these areas could be disastrous and life-threatening. For example, Asbestos is still a big health concern and if you’ve got a property with it, you will need a plan on how to maintain or remove it safely. Therefore don’t rush in and take the do-it-yourself approach where there are legal and insurance requirements for the well-being of the inhabitants and the building.

Summary

Property investing is stimulating and fun. There are winners and loser like with any investment option. To remain on the ‘winners’ side of the equation, consider these recommendations and continue reading our blog for more tips and know-how on property investment.

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