Property Investment: What Not To Do

There are eight simple rules to wise property investing. We call them the eight must nots. If you arm yourselves with them and put a lot of elbow grease into your well thought out plan, you can become a wise investor. The eight rules are simple, do not rely on seminars for information, cut yourself short, assume anything, ignore the numbers, become attached, do it alone, forget practicality, or limit yourself. Let's take a closer look at these eight rules.

Rule Number One: Do Not Rely on Seminars for Wise Investments

If you're really interested in a specific seminar, of course you should go - just don't expect to get specific information which you can use for your investments. General market information can be had from the speaker, which is certainly useful, but always keep in mind that the speaker is only giving their point of view and you should have one of your own.

Ask yourself what information you can walk away with. Then think about why they are pushing that area of property development. Find out if it's really lucrative or if you could do better elsewhere in the market. Be sure to do you research and really get in the know before attempting to invest in anything. Then come up with a plan that keeps your portfolio safe and that you can use to safely invest with.

Rule Number Two: Do Not Cut Yourself Short

Make sure you factor in all the costs and that these do fit into your budget. This includes leaving room for the unknowns. Compare the locations. Compare the costs of the properties and how much you can buy them for and how much it will cost to make the repairs and how long this will take. You must, absolutely must, be prepared to pay for things such as insurance, adjustment expenses, pest inspections, valuations, depreciation, mortgage insurance, real estate fees, repairs, accounting fees, trust and company set up fees, utilities, taxes, and any other costs that may come up while you own the property. Do not rely on other people for this information, nor on the rent you may receive, make sure you can cover all of this regardless of rent income.

Rule Number Three: Do Not Assume Anything

Never ever assume anything. Rather than guess, find out the facts. As an investor, you need to know everything in order to make a wise decision about whether or not to invest in a given property. This is not a game of overnight wealth. While you can indeed get rich with property investment, it does take time, dedication and a lot of hard work on your part. You have to know all of the facts at every step in the process. Asking price, calculated return and how much money you'll have to spend on the property before you can resell it for a profit. You need to know how much rent you'll receive and how the tenants are before you proceed.

Rule Number Four: Do Not Ignore the Numbers

Watch your numbers. Do not borrow more than you can afford. Remember, this property needs to make you money, it's not where you will be living. Think of it as an employee. So the more debt you have the more interest you pay. So you must be able to afford to pay the mortgage regardless if you receive rent or not. Watching your overall cash-flow is definitely important. Remember to be prepared for the unknowns.

Rule Number Five: Do Not Become Attached

Don't get attached to the property you are buying. Look at the numbers and let them be your guide. You need to think of the house the way potential buyers or renters would. You're not going to live there - so rather than thinking of it as your home, think of it as any other commodity; you want to sell it as quickly as you can. Think about the purchase price and how much you will make by selling or renting the property.

Rule Number Six: Do Not Do It Alone

Trying to go it alone, at least at first can be a huge mistake. Remember that you are not yet an expert in everything, nor do you need to be. Learn from the experts. While going it alone may seem like a good way to keep your costs down, it can lose you money in the long run. Do things the right way - you are going to need a property lawyer, a mortgage broker, a property assessor, an inspector and most certainly an accountant. Having a trusted contractor in your corner will also make things easier. Be frugal, but not miserly; cutting corners now will only cost you later.

Rule Number Seven: Do Not Forget Practicality

Keep the practical elements of investment property firmly in mind. A home is a good investment if located near amenities like shops, public transportation, schools and so on. Also, think about quality of life; what is the neighbourhood like? Are the schools good? Is the area generally safe? If the area is disaster prone, you'll need to know that as well. Think of the age of the home too - is the plumbing and wiring modern or will it need to be updated? Is the home sufficiently insulated? Buyers, renters and insurers will all want to know this.

Rule Number Eight: Do Not Limit Yourself

Each time you buy a property, it gets easier. You'll learn from each investment and will grow as an investor. You'll begin to grasp how to take advantage of the market trends. Don't limit yourself to just one investment.

Why Seek Help?

Having a good mortgage broker behind you can make all the difference. If you are turned down for financing by banks, look for a creative financing expert; they may be able to find other financing routes for you. Investing in property takes dedication and hard work, along with the willingness to lean from others. With the right financier behind you and all of your research in place, you can make smart and profitable investments.

Article Source: http://www.hostcontent.net

Author: James L. Hardcastle can show how to wisely invest in property and be profitable. Visit "Loans Australia" website for more great ideas on property investment.

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5

Not yet Rated