The whole essence of investing in property is to get your money to work for you. There several ways to invest your hard earned money. According to Fit Small Business, the most popular options include: rental properties, flipping houses, Real Estate Investment Trusts (REITs) and commercial real estate. To realize these investments, it is advisable to work with a mentor or investment group. This is especially important when starting out. It is worth noting that a well-calculated investment will deliver cash flow, value appreciation and a solid hedge against inflation.
House flipping is a simple globalized property investment and profiteering strategy that involves buying undervalued or distressed properties, having them repaired and offered for sale at a much higher value. According to real estate experts, a good ROI under the circumstances would be in the region of 20% or higher. The investment is ideal for investors with a stellar construction experience; those who do not desire to be landlords and investors with ample resources and time to fund own projects. The buy and hold real estate is a long term property investment strategy.
Investors can choose to hold the property or rent them out for a period of 5 or more years. Besides the rental incomes, the investors get to enjoy property appreciation and tax deductions. The strategy is a win for investors looking to build long term wealth by spreading the risks into rental properties. It also helps build stable cash flow and promote involvement in community issues. For investors keen on putting their money on REITs, there are a few things to consider. First, the investment strategy involves buying property portfolio from public or private corporations.
Secondly, investors are allowed to pick the types of properties they want to put their money in. The return on investment will largely depend on a number of factors, including the type of REIT, market condition and the investment portfolio holding period. Investment in REITs is open to all investors as it can be done on both the personal level and via trusted exchange traded funds and mutual funds. Australian and global investors looking at all the listed property investment strategies can seek funds from the following key sources of financing:
- Long-term investment property loans
- Hard money loans
- Traditional mortgage
- Cash
- Portfolio loan or Investment property line of credit
7 Vital lessons to remember when investing in property
Whilst investing in property can be rewarding, there are inherent risks to guard against such as negative cash flow, foreclosure, poor screening of tenants and high levels of vacancy. According to the Property Update, here are 7 valuable lessons to help you avoid common investment pitfalls.
- Craft a good plan
Every strategic investor must craft a plan indicating where they are headed. A good plan should be grounded on well-proven systems to ensure consistency. Having such a plan of action can help a property investor make a sound investment decision on what property to buy; the location of the property and what to expect from the investment in the long term.
- Think long term
If you take the time to study the market, you will notice a recurring cycle. The turns can be analyzed annually or after a decade and so on. To be on the right side of things, learn to choose properties located in strategic locations in order to benefit from annual price increases. This will help you avoid flat or falling property prices and guarantee high ROI.
- Explore the property market
The property market has numerous submarkets, which give investors ample opportunity to choose most worthwhile investment option. The submarkets in the states are in different cycles of development when analyzes based on the type of property and property value. Before putting your money on property, make sure you have a promising, investment grade property. This can be anything from top-end property to median priced property.
- Don’t always follow the crowd
When it comes to investing in property, the crowd can be very wrong. For instance, market sentiments can cause the market to overreact during the boom time and cause jitters when the market is depressed. Even when things look up, investors need to remain guarded to avoid common pitfalls because every market downturn leads to the next upswing and every property boom leads to the next downturn.
- Use debt as a tool for prosperity
Although debt can be a cause for worry to investors, savvy investors can take advantage of good debt to grow their portfolio and overall asset base. To protect investments against the negative cash flow, investors can set aside funds or line of credit to cover the rainy days.
- Treat the property investment like a business
If you want to become a shrewd property investor, you need to treat the investment like a business. You can do this by surrounding yourself with a great team of experienced advisers and ensure the right ownership and asset protection structure for your property investment is setup. The other merits include choosing the right taxation system and financing options.
- Check the main drivers of property market
Factors like market sentiments, micro economic issues, demand and supply and interest rate caps often drive the property market on the short term. In the long term, drawn-out factors like national wealth and population growth usually come into play. To ensure positive results in both the short and long term, prospective investors must stay away from greed and other endeavors aimed at making quick profits as well as unfounded fears.
Need Property Investment Assistance!
If you are a property investor struggling to identify where to invest your hard earned money? Sunshine Coast Pumped On Property can help get the right kind of property and leverage to score big in the market. The firm offers a complete suite of buyer support and agency services around the Sunshine Coast Area since our property experts understand the intricacies of the market. To get help, call the offices or visit the company website.