Making Money in Property Investment
by Arina Smith Finance 27 June 2018
TV shows about property Investment make it look so easy. You buy a fixer-upper, drop some cash into repairing it and sell it for twice the property’s worth to a smiling couple who fall in love with the home. If only it were that easy! There are a lot of things that go on behind the scenes that the networks don’t show.
Before sinking your life savings into a property, there are some things you should know to get started. The better informed you are about the ins and outs of property investment, the quicker you’ll turn a profit and avoid the pitfalls that come with buying a money pit. You’ll make better choices concerning the property markets you invest in.
The U.S. Census Bureau reported that real estate has been a sound investment since the 1940s. It saw a short decline from 2006 until 2008 where it has increased in momentum once again. In major cities where the job market is flourishing but the availability of housing is scarce such as Los Angeles, San Francisco, New York, Boston, and Washington, D.C., millennials are encouraged to buy homes while they can.
How to Make Money Investing in Properties:
To make a killing as a property investor, one of two things must happen regularly. The first is that you’re able to buy properties for next to nothing and allow their values to increase organically or through the improvements, you make to the home. The term for this option is called capital growth, and it’s the fastest way to turn a profit on a property.
The second option is to find a home or apartment complex that is inexpensive to buy, fix up, and maintain. Rather than put it up for sale on the market, you opt to rent it out instead for considerably more than what you paid for it. Keep in mind, as the homeowner, you’ll be responsible for things such as property tax and manager fees. Factoring these expenses into the rent you charge is how you come up on top when you utilize the positive cash flow method to profit.
Factors to Consider That Influence the Value of Property:
Capital growth appeals to many property investors because they’re not forced to play landlord to a bunch of tenants renting their houses and apartments. That doesn’t mean, however, that there isn’t research needing to be done to make an informed decision as to whether a piece of property is worth its asking price or not. For example, just because a home or apartment complex looks good and the city it’s in seems stable doesn’t mean that it will be a good investment for you.
You’ll want to look at new infrastructure because it plays a big role in how much value your property is assessed at. It could be considerably more or less than what it was valued at originally. Other factors that cause property values to fluctuate are rates of unemployment, exchange rates, and interest rates. Taking all of this into consideration, you should create a property report, which is easy these days since many companies offer a free property report.
If you’re dead set on making positive cash flow your method of choice as a property investor, there are some things you can do to help your chances. For example, you need to buy property in areas with high rental income. High vacancy rates are often a red flag alerting you to take your business elsewhere.
You could have difficulty renting out properties in the area or sell them to other investors. This could hurt your chances of profiting from your investments especially when homes and apartment buildings are negatively geared. Adding items such as a pool to a property doesn’t necessarily increase its value in the eyes of renters, either, and it requires you to keep up maintenance on it when the tenants do not.
Character Traits of Successful Property Investors:
The most successful property investors share a certain set of traits. First, they’re fiercely determined individuals. That means that they’re willing to take risks and follow through until they achieve desired results. For many, failure is unavoidable, but the lessons learned proved to be valuable because they’re able to avoid the same missteps in the future.
Other things that help property investors achieve greater success include acquiring an education in real estate, having the know-how concerning the right real estate deals, having a network of top real estate experts to connect with, building their own real estate network, and having real estate partnerships for a better and more diverse investment portfolio. Forward-thinking men and women are the most successful investors in the world. Their resiliency and knowledge of different markets help them make the best financial decisions.
Although doing property investment(in any well-reputed location)is one way to make money in real estate, there are other options available. For example, you could make your focus be on your real estate business operations instead. It involves you selling additional services to the people living in your apartment complex by offering them a coin-operated laundry facility to use at their discretion or having vending machines located throughout public areas where you could generate additional funds regularly.