Investing in properties has been a well known smart investment for the last century. Most investors consider this method as one of the safest investments on the market today. With an increase in the global population and people moving out from rural locations into cities there has been an expansion in building new homes, hotels and places to stay.
How to invest smart?
With financial crises throughout the world affecting investment properties, stock markets and other industries it is becoming more important than ever to learn how to invest smartly. When starting out and planning your first investment into property, one move wrong here can make or break your financial planning.
Get ahead of the curve
On average we see financial crashes every 10 years. By monitoring this closely we can know when the price of property will be the lowest and when will be the highest. Investing during this period can increase your investment profit significantly.
To check this out we advise you to spend some time and analyze historical data for the previous financial crisis that affected the real estate market. Search for inconsistencies, big drops, prices going up and try to figure out what happened in that specific time period. Was it some financial crisis, natural disaster, war?
These small pieces of information can give you good insight into what can potentially happen if the same thing occurs again and on average how long it actually takes for the crisis to hit. The biggest money is always made before and after the crisis for smart investors as prices start to vary a lot.
Plan for a long term investment
Some might see property investment as a short term investment opportunity where you simply want to flip properties. However this is not the correct way to view this type of investment activity and it should always be viewed as long term. Sometimes it will take a long time for you to find the right buyer, or to rent the property. This requires long term planning and knowing your financials all of the time. Having a plan for the long term and a clear goal of your investment management will help you out during “short term investments” much easier.
Finding a location for your next property?
One of the most important factors when it comes to estimating value of the property is its own location. How does the location of the property impact the price? Property value in most scenarios is determined by the average value of the properties in the neighborhood. Examine your area and know how much properties are going for around the location where you plan to start your next investment. It is important to check historical data of the properties in the area and see if the prices are going up or down. Knowing this will ease your investment risk.
Estimating the value of the property?
It is always good to have an experienced real estate agent by your side who knows the area and is good at appraising properties. Sometimes giving extra money upfront to have an expert give you an appraisal can save you a lot of unnecessary money spent later on. Even the most skilled eye can miss things that on the first look just look right but can later take more money out of our planned budget. Investing in properties is all about good estimates of the property, and being able to get it at the best price with minimal investment needed for renovation while the market price is higher. Following these 3 rules you will most likely end up in profit all of the time.