Many budding investors dream of having a revenue-generating property under their name. Some play it through by linking the concept to the board game Monopoly, where you have to buy properties, accumulate rent, and avoid bankruptcy. However, winning the game in real life is not as straightforward as it seems.
It’s challenging to break into the saturated property market. There is only a handful that survives past the first investments, but that doesn’t mean that climbing up the property ladder is not possible.
A bit of know-how on the market will increase the likelihood of achieving success as a property investor. With that in mind, the tips and tricks below should help you navigate the investment process and drive the best results.
Tip #1: Maintain a Clear Focus
Before taking the steps forward with your investments, it’s vital to know what you’re getting yourself into. That’s why you need to ask yourself what you’re expecting out of property investment. Is it to gain assets to help grow your business, or invest in a holiday home away from the city to help you get through dark financial times?
There are also some who just want to have a back-up, yet consistent, income. Meanwhile, you can also expect a capital gain when making property investments. What you want to happen will determine where you need to focus on your next steps.
Tip #2: Follow a Strict Timeframe
If you have a solid grasp of what you want from your property investment, the next best move is to set a coordinated timeframe. It’s a way to measure your progress and keep yourself on track with the process. By having a clear overview of your schedule, you can forecast your achievement down the line.
Not only will it help you see your growth, but following a timeframe also helps you determine the form of investment that is right for you. For instance, if you’re in a hurry to generate returns in a short period, the best option is to ‘flip’. Flipping means that you buy under-market-value properties, give it a fix-me-upper, and put it back on the market to make a quick profit.
Tip #3: Avoid Over Leveraging
One of the difficulties of building the first layers of your investment portfolio is developing the discipline to hold your decisions. With that in mind, many rookies make the mistake of over-leveraging by using more than 50% mortgage to buy a property.
If you’re in a position that requires re-mortgaging, you can ease the situation by shortening the duration of the loan to avoid any complications down the line.
Making an investment is all about putting money to work. If you deal with your cards right, you can expect to generate money that can cover the risks you take. This involves regular maintenance of the property, insurance, utilities, and even paying for taxes.
While the concept of real estate investing is relatively simple, in no way it is easy. Falling into common pitfalls can lead to costly consequences, that’s why it’s crucial to equip yourself with some basic knowledge before diving into the property market.
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