As the name suggests, property investment is the purchase of a property where that property is then enhanced or leased out in the market to earn a return on investment. It is something that you have to plan out carefully and not just waste your money into something that might not be beneficial to you in the long run. Some people, unfortunately diverge into property investment where they actually fail and did not get a return on investment in the field that they have chosen. Some people though, investment for themselves as they want to use the property investment and some people invest for business. Investing is a risky but as an adage goes, “more risk, more reward.” And definitely more and more people think that by swimming into a pool of risks, there will be definitely a sea of reward at the end. This is definitely not the case that we are dealing with. It is true that in business , you should risk a lot of time , a lot of money but we don’t just wander around the investing world purchasing properties, acquiring houses and buildings without knowing how to turn these risks into a beautiful reward.
We have some tips though that will definitely help property investors lessen the menace of resulting into losses rather than gaining the profit that they mostly deserve – whether be a personal gain (which includes a happy life and a happy home) or profit margins.
Location, Location, Location
Location is one of the key factors to consider when getting a property investment. A good location could mean differently to different kinds of people. For instance, one person might want to get a tranquil life, thus, he might want to live in the mountain parts, or near a lake where everything is just so peaceful and quiet BUT another person might want to live in the city because their office is there and they will have more access to a lot of thing like hospitals, malls, schools, and the like. Depending on your personal preferences, it is you who should choose where to invest in. As long as the location you have chosen is the most convenient for your daily life, then go for it.
In the business perspective though, it is also the same but it might be wiser to invest in properties near nature with breathtaking sceneries. You can opt it out in the market and have it leased out as a vacation house. For instance, a beach property or lakeside property. More and more people are drawn to the ocean or lakes these days as their means of finding serenity and happiness to walk away from all the stress their daily life is giving them.
Buy for Less. Sell for More.
Most investors buy abandoned houses and properties, renovate them and sell for a much higher price. This idea is much better than buying a beautiful new home and then sell it after. Imagine, no one would want an old abandoned house. After all, it looks scary and a place where no person would ant to live in so the previous owner of the house will sell their house for a low price. And then, the investor comes in and makes it a dreamy house to live in. More people would want it and more people would mean a great market. A great example for instance, is an old abandoned house is this old house on the left bought by Rick and Michele D. The house was so old an abandoned that the front porch, as you can see, is falling off, windows are broken outside and it has been set on fire for a few times. It looks broken and malformed on the outside, how much more on the inside. So the two purchased this property for only $1. People might think that they must be crazy for buying such property considering it might not be good for inhabiting anymore. But I say they’re really lucky to get the chance of buying it for only $1.
Nobody would want to live, rent nor buy an abandoned and broken house. So, the family got their hands busy for renovation. Renovations can vary from fixing small problems in the house to adding a pool in the backyard (which may be costly). In order to make a good renovation, you should have a plan beforehand and you should consider all the expenses that would be spent for the materials and labor.
In a year and a half, the family was able to restore the beauty of the house with as little cost as possible. If you look at the house on the right, you will never know this house was actually bought for $1. They can even sell it for a much higher price in the market if the family would plan on selling it.
Think about REIT
REIT (Real Estate Investment Trusts) is a great way of earning income with properties when you think a full ownership of a property is too risky at the moment. To better understand what REIT is, it is where your money along with other investors’ money is being gathered altogether that invest in a portfolio of income generating real assets such as hotels, offices, rental apartments, etc.
So, investors invest their money, the money raised is used by the REIT to purchase a pool of real estate properties. These properties are then leased out to tenants where the income is being distributed back to the investors. It’s a great way to start with less risk on your hands.
Investing overseas is a great idea to expand the horizons for there will be broader market exposure. Asia , for example. There are a number of emerging markets in Asia which follows free-market economic policies. This kind of economies will grow rapidly compared to currently developed market economies. If you consider this idea in the future, you would probably need to search which countries has the least expensive properties. But of course, don’t be tempted to quickly jump into the opportunities without having to consider all other aspects. At least think about getting properties in tourist spots. That way, there will always be cash inflows plus you will hit two birds with one stone when you plan on visiting the site – business and vacation.