Just because real estate prices seem to have hit a temporary low in many countries around the world, that doesn’t mean that profits from property investments are hard to come by. Even during a real estate market slowdown, stagnation or depression, profits can be made locally and overseas. Let’s dive into the top ten tips that real estate investors should follow and apply to their property portfolio building strategy to ensure success from their investments.
Real Estate Investor’s Dream Tips
- Research the curve:
The concept of a property market cycle existing is not a myth. It’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area you’re considering purchasing in and determine the overall feel in the market for prices currently. Are prices rising? Are prices falling? Have they reached a peak? Ask yourself these questions and be up to date with the new information that is constantly circulating.
- Get ahead of the curve:
As a basic rule of thumb, professional real estate investors seek to buy ahead of the curve. If a market is rising, they will try and target up and coming areas. These areas will most likely become ‘the next big thing’ and those who buy in before the trend will stand to make the most profit. As a market is stagnating or falling, many successful investors target areas that enjoyed the best levels of growth, yields, and profits very early on in the previous cycle. This is because these locations are more likely to succeed.
- Know your market:
Who are you buying property for? Are you purchasing for renovation to resell to a family market? Think about your market before you make a purchase. Know what potential buyers look for in a property and ensure that is what you are going to be offering them. By knowing your market, you are able to see the good from the bad and make a smart investment. Additionally, this will help you stay within budget when it comes to your next purchase and can give you a better return. Stay smart and plan ahead.
- Capital growth potential:
What factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase? Think about what you want to achieve from your investment and then do the research for the area to find out whether your expectations are realistic.
- Profit margins:
What levels of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backward towards your initial budget to work out your potential profit margins. At all times you have to keep the bigger picture in mind to make sure your real estate investment has good potential for profit.
- Think long term:
Unless you’re buying a property with the intention to flip it for resale and profit, you should view real estate investment as a long term investment. Real estate is slow to liquidate the asset, cash tied up in property is not simple to free up. Take a long term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.
Even if you are a seasoned real estate investor, it’s always good to remind yourself of the “basics” that made you so successful. For beginners, real estate is an opportunity that you should take. With the proper research, time, and education you could become quite successful in this niche!