The economy is said to have recovered from the global financial crisis of 2008 and yet there are still many industries and sectors of the economy which are struggling.
The change in economic outlook has led many people to consider their options. Some have chosen to become more self sufficient while others are looking at alternative ways to generate an income or create financial security.
Despite the ups and downs of the property market, it remains a great place to invest when you know what you’re doing.
Know Your Position
You can’t start investing unless you know where you currently stand. This means assessing how much equity you have already, (if you own a house) and making sure that your debts are reduced or preferably gone, before you leverage off your home’s equity to commence rental property purchases.
The focus initially is on maximizing the funds you can borrow and then finding the right property.
If you don’t already own a home then simply purchasing a place to live in is the first step on your real estate investment ladder.
Property Investment Strategies
There’s incentives to get onto the property ladder and later on you can sell for the profit or rent your own home out and purchase another property for your own use. Of course as you find your feet your property investing plan will need to evolve to include other strategies including property or buy to renovate and sell.
Purchasing a property below value will allow you to generate a profit on your subsequent sale and different selling methods are utilised so you’ll need to become an expert in method that’s most prevalent in your area. For example in Sydney, Australia the property sale is achieved by auction using a Sydney auctioneer who will manage the bidding and aim to achieve a great outcome for the vendor.
One At A Time
When you’re starting out in real estate investing it’s usually not a good idea to buy more than on property at a time; no matter how attractive the option looks.
The fact is that you’ll be undertaking a steep learning curve; trying to focus on more than one property is liable to end in failure. Focus all your attention on one property, learn from your mistakes and you’ll see your investment bear fruit.
It’s very likely that you will do much of the work yourself in the first property you own. While this can be a good idea you should consider whether this is the most cost effective method. You need a high quality finish in order to sell the property for more than you paid for it. Sometimes it’s worth allowing for the cost of the professionals in order to get the look just right.
Know Your Market
The property market is constantly moving and it’s not always in an upward direction. You need to start monitoring the markets and try to predict what it will do next. You may not be right every time but you’ll get better at understanding the market movements.
This will allow you to buy when the market is low and prices are at the bottom. You can then sell on a rising market and should create a credible return on your first investment. But don’t forget that to build a property portfolio you need to re-invest this money into your next property. Selling your first home is not an opportunity to splash the cash!
Don’t forget prices can go down as well as up. You need to consider this and whether you can afford to wait to sell your investment home.
Budget, budget and budget!
Perhaps the most important part of investing in real estate is sorting out and maintaining your budget. It’s easy to see a house and fall in love with it; blinding yourself from its potential as an investment.
As part of your planning stage you should create a budget. This defines what you can spend buying a property and what you can spend renovating it. If you deviate from the budget you will be eating into your profit.
A good financial planner will help you evolve your investing plan, which is sure to be balanced and include other investment strategies not just property. Remember the idiom: All your eggs in one basket. Spread the risk, and get professional advise for all your financial decisions.
Providing you keep your eye on the prize you can make investing in real estate an excellent vehicle along with other strategies to secure your financial future.