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The Property Pack
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Real estate investments are some of the most stable, highest-reward investments available. Here’s how to succeed without making rookie mistakes.


Start small


There’s a learning curve involved in any new venture. Be cautious about overinvesting in your first property purchase. You can partner with others in a joint venture or start with a smaller property or in a less competitive market when you start. If something goes wrong, then you want to make sure that you have enough capital to recover and do better the next time.

You do need to pull together a down payment, even if you’re using financing to carry a portion of the cost, so there is a minimum buy-in involved in property investing. The more you can put into the initial down payment, the less you’ll pay in extra fees and interest on financing, so don’t jump too soon.


Specialise


It pays to focus your efforts on a specific type of property investing. There are several dimensions to this, including size, type and location. Investing in high-end condos is different from large-scale commercial, or industrial, or holiday properties. If you have subject-matter expertise in a certain type of property, or a reason to be interested, then that can guide your specialisation. You also want to drill down into not just a general area, but also a very specific location. All this specialisation helps to limit your risk, improve your knowledge, and results in better returns on your investment.


Do your research


This is related to specialising in a specific type of property investment. If you narrow your scope, then you’ll find it easier to become an expert and do all the requisite research more quickly and thoroughly. You want to understand your market and what sort of person will purchase your property when you sell, or what type of resident will want to be in it if you’re investing in a rental property. Understanding your customer in as much detail as possible helps you to make decisions that meet their needs and appeal to them, and ultimately to get more out of your investment. However, remember that it’s a financial investment, and be careful not to be swayed by personal opinions or design taste. Property investment tends to suffer from too much personal opinion and not enough clear-headed assessment of the financial realities.

You need to understand not only the potential but also any and all risks involving your property, which means a broad understanding of regional and local factors such as politics and trends in public opinion or taste. If you’re investing overseas, then you need to monitor currencies and how shifting exchange rates are impacting the value of your investments. You need to know about tax rates on the purchase or sale, and how many ongoing costs will be associated with your investment, such as maintenance or renovations and taxes or fees.


Set a timeline


The worth of your investment changes over time. This is a basic principle, but when it comes to property investing, there are added financial complexities. In general, the longer the term of investment, the greater the potential gains. However, properties often have costs that rise over time. If you have a loan or mortgage, the payments accumulate and need to be set against the final sale price, so if you’re flipping properties, then you’re usually motivated to buy and sell in shorter cycles and to avoid holding property too long and paying too much on the financing.

Property maintenance, taxes and insurance are also recurring charges that can stack up over time and impact your profit margin on the investment. When you invest in property, you need to have a plan for how long you’re going to hold that investment and how that’s going to impact its value. Some property investments are for the long term, and you derive value in the form of personal use or rental income, while other property investments are a renovation or presale flip and designed to make money quickly.

While property investment sometimes seems like a separate field from regular investing, it’s actually valuable to monitor finance news and follow the markets. TheBull offers Australian coverage of breaking news and market movements to help you stay on top of local and global changes and make the best choices regarding your property investments.

Property investing has the potential to be high reward and somewhat lower risk than many other types of investment. Go slow, do your research, and make choices based on your financial capacity and functional timeline for best results.

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