Tips for Real Estate Investment

Real Estate Investment

The chances of succeeding in the role of a property investor increase greatly if you proactively observe the market and follow certain guidelines and strategies.

Those who have invested in a diverse property portfolio which generates good revenue are likely to fare better financially in difficult economic times and will not lose much value, even when going through dark financial days.

Following are some tips that should help you in the process of real estate investment:

Real Estate Investment: A Clear Focus

As somebody looking to invest in real estate, you should be very clear as to what you are expecting to get out of your investment. Is it any of the following?

  • Do you want it to be an asset for your business? For instance, having your own office space?
  • Do you want a holiday home which generates revenue even when you’re not occupying it?
  • Are you looking for a short term capital gain?
  • Is the asset a buy-to-let option for you to provide yourself a secondary income which is consistent?

Have a Time Frame?

The timeframe in which you are expecting to receive a particular return for your investment also determines what type of investment you should make. The opposite is true as well because if you are aware of what you want you will accordingly deduce a coordinated time frame to achieve the returns that you are expecting.

Those who are looking for a windfall gain can give flipping a try which is basically buying at a low price and selling at a high price within a short period of time. This involves buying properties which sell for a value which is quite lower than the market price, renovating them and later selling them at a higher cost, yielding high profits. It comes with a certain degree of risk but if done wisely it can be a great way to make money from real estate investment.

If you are looking for a long term return from your investment buy-to-let can be a sensible investment. While the returns depend on various factors such as periods of vacancy, interest rates and ongoing maintenance costs, one can still expect a return in the range of seven to twelve percent in the long term.

Real Estate Investment: Avoid Over-Leveraging

In order to purchase a property you should avoid using a mortgage that exceeds 50 percent. This may seem difficult initially as you build your portfolio construction but it will become feasible within a short period of time.

The idea of re-mortgaging may sound appealing on paper but it rarely ever pays off in the long term. Make sure you shorten the duration of the loan if you have no option but to use it. The longer the duration of the loan, the more painful it may prove in the later part of your life.

Avoid Shared Mortgages

Shared mortgages allow borrowing at a higher rate but it considers one person as the core borrower and the other borrower receives a smaller sum of money. The core borrower is usually the one who earns higher even if they have a lower credit rating, increasing the interest rates substantially.

Make an Overseas Investment

If you are not very confident about the domestic property market yielding good returns you can consider taking advantage of foreign markets and currencies which can allow you to invest a lower sum of money with better returns.

It may require you to carry out an extensive research which can consume a lot of your time but it will make sure that every detail is taken care of before a third party is handed over the funds to manage.

You should also take into consideration the political stability and the economy of the country wherein you are looking to make an investment. A country that sees a high influx of tourists can be especially suitable for a real estate investment.

Exit Strategy

When it comes to investing, timing is everything. Knowing when to put in your money is only the first half of the battle. You may have to keep a vigilant eye on the market to know when is the right time to pull out of a particular investment.

As important as it is to make the right investment, it is equally crucial to safeguard your existing assets for which you may have to find answers to questions, such as how much does a Will cost and which insurance cover would be suitable for your circumstances.


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