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Posts Tagged ‘property investment’

Everybody knows that the property market can be difficult to predict. Not everybody knows that good property investing is all about good quality information. The fact is that property investment is really a business operation. Like a business, how and where you source your information is the key to success.  In the property market the difference between good information and bad information is a major quality control for your investments.

The Value of Information When Investing in Property

If there was ever a case of information being literally the heart and soul of an industry, that industry is the property market.

This is why good information is so important: Read the rest of this entry »

The big new buzz in the property market is “the service component”. This major new move is based on technology and market demand for speed and efficiency. Read the rest of this entry »

Whether you’re already in the Property Investment game or looking to be, there’s a dozen things that could go wrong or right on your path to success. Whether you’re buying your first unit or considering purchasing an industrial warehouse or some Inverell accommodation, follow these tips to help you launch a successful property strategy.

• Start Small

As with all properties, unless you’re ultra-experienced or have lots of cash to play with, there’s no point in taking a big risk that you can’t afford. Many of us think that the better the risk involved, the better return on investment. Mostly, this is true, but if you also can’t afford to cover yourself if the investment falls through, you could be in for a lot more strife than you planned. The key when first starting out is to start small. Even if you can afford something bigger and better, find something that’s low risk and that’s almost guaranteed to give you a successful first foot forward.

•  Study the Success Stories

There are plenty of success stories out there when it comes to property investment and you should conduct some research into how these happened. What did these investors do differently? Did they buy at the right time? How did they structure their investment? All of these things will help you and give you ideas about how–and how NOT– to go about your investment.  You can also research failure stories to see what others did wrong and avoid the same mistakes.

• Take Risks

Of course, all property investment is a risk and you’re never going to get anywhere if you don’t take some risks. Low risk is great to start out, but as you start becoming more experienced or perhaps are looking at buying your second property, you can start to look at something that’s has a higher risk factor. And if you’ve got some useful property valuation software in your hands, the numbers will show you that higher risk means a better turn,  especially if you’re using your first property as collateral. While you should be wary of risk, you also shouldn’t be afraid of it. Taking risk is good, but always make sure it won’t leave you broke.

• Keep an Eye on What’s Hot (and What’s Not) 

No investment will be a success if you just kick back and don’t bother getting involved. So if you’re looking at investing long term, keep an eye on where potential property hotspots are cropping up. You can investigate this on a national level or a state one or just in your own city. But whatever you do, you need to know which areas are likely to boom in future and which ones are not and why. There’s no point in investing somewhere if they’re planning to build an airport next to you in ten years’ time. On the other hand, if you can see a new shopping centre is being developed in a particular suburb, you might want to get in now and reap the benefits later.

• Keep Trying

One of the biggest keys to becoming a successful property investor is to keep trying. Investment is a long term game and successful investors rarely ever just give up. There will be mistakes along the way and you can always learn from these, whether it’s investing too much or too little or simply buying at the wrong time. Once you’ve got one property, getting the next one is much easier, so whatever you do, don’t throw in the towel. Keep plowing forward and you’ll find that down the track, your success will start shining through.

Buying investment property can be tricky enough in good times. Buying during a downturn can be a mixed blessing, too, but there are positive elements in this type of market that need to be understood. Readers should note that this is very much a real “due diligence” exercise, and you must have your facts straight about any intended purchase in this type of market. Don’t guess about anything, get your numbers right.

Values and risk management in a falling property market

A falling market can be a great opportunity- If the property purchase has proven intrinsic upside values.

These values can be:

• Unrealized development potential
• Undervalued property or land assets
• Commercial options
• Subdivision or consolidation of title
• Future location value based on projected developments

This may seem a bit too good to be true, when you see the upside value. You may also wonder why the vendor isn’t aware of that upside. As a matter of fact, they often are, but have their own reasons for selling. In some cases, vendors sell to make a loss against other consolidated profits. A falling market can be a blessing to some investors in this regard, creating a built in offset against capital gains. In other cases, they simply don’t have the capital to hold the property. The falling market creates financial pressures on vendors in different ways.

Then there’s the risk factor, which is very easily defined- Buying a lemon in a falling market. This equates to losses up on losses, and it’s a situation to avoid at all costs. This is also where “due diligence” comes in with a vengeance.

The investment property must:

• Be liability-free, with no built-in added costs on the premises or land. These costs can kill an investment and turn it into a black hole.

• Have no expensive title issues. (This is a case where you do look a gift horse in the mouth, and get a professional opinion of the horse’s dental hygiene on principle.)

• Be what it appears to be in terms of investment values. You may need to do some research, but it will be worth it. Check everything and double check it with an independent valuer if necessary.

The falling market environment

Falling markets are typical killers for property investment. Wondering how far a market will fall is pretty futile. The fact is that the falling market has to be factored in to the investment strategy before you even purchase.

For example:

The property market has fallen by 5%. You factor in another 10% as a scenario, and instead of filling your books with a semi-fictional investment property value, you make a conservative valuation for accounting purposes. This gives you actual accounting figures for your property portfolio, not guesswork, as well as reflecting the commercial realities.

The good news about buying in a falling market

Markets don’t fall forever. Resistance to price drops is very strong, simply because people don’t want to lose money. You can defray the drop in value with rental income or other commercial options so your cashflow is minimally affected.

You can make money in a falling market. Just remember to do your homework and make sure you’ve got all bases covered.