One of the smartest things you can do with your money is to put it to work, so it creates wealth. There are many assets to invest in, though none are more popular than real estate.
Investing in real estate can be risky when you don’t know what you’re doing – but isn’t this so for any investment? All investing carries some risk. Buying a house is an investment, and anything you do to improve that building is either going to hold its value or further it. There are many strategies to use when investing in residential property, including:
- Buy and Hold
- Renovate to Sell
Owning your own home is an investment in property. How? You’re paying off a mortgage, maintaining and probably improving the house and gardens over the years. All these actions lead to less debt and more value, which increases your equity in the asset.
First home buyers buy with the intent to get a foothold in the property market and then in a few years sell it to get a better quality and usually larger home – thus moving up the property ladder. There is a saying you only lose when you sell – suggesting you should never sell your property. It is true because property always goes up in value, so your asset wealth increases over time when you can hang on to it.
Most of us have to sell a house to purchase another one. Therefore, we look after each home we own to get maximum sales price when it’s time to sell and move on.
As we mentioned, many buyers buy to fix up and sell, all to progress up the property ladder. And then some renovate houses other than the one they live in. Doing up a house isn’t cheap, but it can be very profitable regardless of selling or leasing the property. Look at attending local house auctions to get the best deals on the property themselves, and try and learn renovation skills yourself. The chances are that you won’t be a trained electrician or plumber, so leave those things to the experts. But you can paint, assemble fittings like wardrobes, hang curtain rails and even lay carpet. Yes, it’s quicker and easier for others to do the job for you, but the more you save, the more profit you make. Remember that all jobs undertaken within the property need to be secure and safe for when you sell the house.
Renting aka Buy and Hold
Becoming a landlord isn’t for everyone, and it does come with some potentially huge financial risks. If you have a tenant that breaks your property, builds arrears on rent, and whom you have to drag through the courts to have them evicted, then you are going to be very much out of pocket.
However, it can also be an easy way to make money. If the property you are leasing has little or no mortgage, then the money you receive each month is pure gravy. When looking to lease a property, make sure that you do the correct background checks for a potential tenant and have regular inspections of the house. But also be conscientious; if something needs fixing, then get it done as soon as you can.
Furthermore, investing in rental property, there are two gains one is equity, the other rental income.
The attraction of real estate for investment has real estate agencies specializing. For example, Malta Sothebys Realty recently launched its buy to let property portfolio in prime areas for property investors.
Hold & Release
This type of property investment is only something you can do if you can afford the time. It can be done with a property you have renovated or with one that you have brought during a dip in the market. The idea is that you hold the property until the market turns in your favour, and then you sell it. This is speculative, and it can be straightforward to misjudge the market if you end up needing to sell when house prices are low.