Things To Know Before You Start Investing In Real Estate
Topics: real estate investing, property investing, real estate investor, property investor
“You either have the time or you have the money”.
This old saying still stands true for property investing. Most people either have the time or they have the money.
People that do not have the money to invest in so called easy investments such as the many off plan properties and townhouses of 400,000 and more, they have to find the time to dig deep and search long and hard for the correct properties that fit their investment profile.
In a times when property prices are very high it may prove quite difficult, however in a time when property prices are low and interest rates are high, such deals are easy to find.
Long terms investors are well known to buy in times when properties prices are very low. However, in hard times it is also hard to get bonds. There is always the proverbial writing on the wall the small print.
Many investors have started with no money and made it big. Though this is not a motivational article in any way and don’t look around for any hype, it is important that one does follow though with the suggestions and at least learn more about all the options provided before making use of them. Also remember to use your emotional guidance system, that gut feeling to know what you are comfortable able and what not.
Who Are You?
What a silly question. We all know who they are, or at least we think we do most of the time.
In property investing there are a 2 very common types psychological profiles of investors. It is very important that one identifies who they are in those categories. If one doesn’t identify the category, they can invest in the wrong type of property and have problems down the line. Many investors have purchased the wrong property to their profile, because they had no idea what type of property would suite them best. Then the obvious followed; they got disappointed and abruptly ended their investing career saying that property investing is not for them.
To avoid this and many other related obstacles lets go over the two main profiles briefly. This will also greatly help with the choices that one makes in the investing options further presented in this document.
High Risk High Return
The high-risk high return profile is the person that loves the risk and can easily sleep at night if they lose their investment. Though this may sound funny to some, there are such people that take risks daily. Investing in high risk property is no different than taking part in an extreme sport. That is perfectly fine for them and they won’t lose much sleep over their risky endeavors, but this may be terribly difficult to live with for those of the opposite profile.
In property investing, a high-risk property is defined by the individual assessing the risk. Generally speaking, this has been commonly associated to properties that have little capital growth in the present and are located in risky areas that are also called “emerging markets”, “low cost markets” or “bottom markets”.
One such example time of writing in South Africa is the townships. Property in these areas are starting to take off, however by most low-risk investors these are seen as high risk to life and to losing the property to squatters and other factors that are out of their control.
I am often asked why are these properties high return? The answer is simple, when these areas reach maturity the returns will be calculated in the thousands of percentages.
Therefore, high-risk investors that can stomach the risk, earn a passive income from such properties from the day they buy and to the day they sell. Over a few years investors can easily earn between 500% and 1000% return on their money.
It is to be remembered that high-risk is only defined by the individual investor and usually high-risk investors do not see themselves as such.
As one of my mentors once said to me, Call me a contrarian investor.
Low Risk Low Return
The opposite of high risk profile is the investor of low risk low return. Such investors will only invest in a good area or established market where they find good capital growth and they know they can sell the property any day they choose and do so without much problem. No risk of squatters and they can visit their investment whenever they wish as it is in a safe area. Often such investors also manage their properties.
This type of property, at time of writing, is commonly associated with the preferred security complexes with entry level townhouses.
Now that we briefly and generally explained two main types of investors, it is to be noted that there are many others in between. However such subject is far beyond the scope of this article.
Just be aware of how adverse to risk you are as a person. What is important for every investor is to know how much risk they are willing to take before they stop sleeping at night.
As Richard Branson once said in a book, don’t do anything that you will lose sleep over.
With this endnote we can get started with the technicalities in the next article.
Sean Wheller is a real estate agent, investor and the founder of the largest online property investing education website in South Africa, www.PropertyInvestorNetwork.co.za which specializes in real estate training, property investing courses and seminars.
Previous Articles Highlighter:
Online Forex Trading Is The New Hot Wave And Its Time To Jump On And Enjoy The Ride To Prosperity (1)
Much of the new investor's success can be directly related to there enormous drive for knowledge due to there understanding, that the smarter the trader they are the more money they are able to make.
Prepaid Cards Are A Safe Alternative (2)
In reality, this is known as the credit card without any debt. The prepaid visa card is powered by the client's own funds and whatever funds are loaded to the card is the amount that is available for expenditure purpose.
Important Information About Unsecured Credit Cards (3)
You should also remember not to keep applying for credit cards as it can cause further problem in your credit score. There are also secured credit cards which are simple to understand as they are secure.
The Three Different Types Of Forex Traders: Which One Are You? (4)
They will be using a time frame of maybe two different charts with 5-minute and 15-minute candlesticks (possibly 30-minute if they are a longer-term day trader), and will tend to set profit targets of 10-50 pips.
The Great Bailout Stall, Part IV: A Bad Dream (5)
Now, I ask you to help spread the word --- friend by friend, neighbor by neighbor, coworker by coworker --- that what America needs is a hemorrhoid operation, not more bailouts.
How Issac Newton Can Make You A Better Foreign Currency Trader (6)
As a basic rule of trading, you could say that if there is a trend and you are seeing relatively quiet market conditions (meaning there is no real cause for a change in value), then that trend will likely continue and it will be in your best interest to place trades in the direction of that trend.
An Investors Guide To Morocco (7)
The country is modernising and liberalising itself within its Muslim context. The latter means that during Ramadan, for example, all street cafes and many restaurants will be closed until early evening.
Learning To Trade Forex- Part 1: Books (8)
Forex is NOT a get rich quick program, if you slowly work at it and become proficient you can be very profitable. If a book is telling it will make you money fast I would put it down and run the other way.
The Forex Program Best Suited For Your Needs Can Vary Based On Your Anticipated Trading Style (9)
Topics: Forex trading course, Forex course, learn Forex trading, learn currency trading, learn currency trad A Forex program designed to provide you an exceptional way to learn currency trading should be based on your individual trading strategies.
An Investors Guide To Germany (10)
Those staying in Germany for a short visit are not normally required to register. Hotels are legally obliged to register guests and this information is passed automatically to Einwohnermeldeamt.
An Investors Guide To Italy (11)
Property owners are obliged to file annual tax returns but are only taxable on income arising in Italy. However, there tax is levied on the notional rental value of the property (based on its registered value) whether or not it is rented out.
Forex Currency Trading Is A Path To Quick Riches And Long Term Prosperity (12)
Millions of people join the markets world wide monthly and thousands of those become over night sensations. Just make sure you learn currency trading at its highest level in addition to understanding all the bells and whistles of your FX software and you will do fine.
Credit Card Consolidation Loans (13)
There are several types of loans available for those who desire a credit card consolidation loan. First, you can apply for a loan based on your signature. This loan is given to those who usually have a higher credit rating as there is nothing pledged as collateral to back up the loan.
Learning To Trade Forex- Part 2: Videos (14)
When you are describe a principle there is nothing quite like being able to witness it happen while someone talks you through it. With a video the concepts are shown to you directly in the setting you will see them in making it easier to later go back and apply what you were taught.
Answering Your Money Management Questions (15)
It would be too easy to find yourself up to your ears in debt again. Once you find a budget that you can stick to, it becomes a way of life.
Your Credit Repair Questions Answered (16)
This article may not answer all of your financial needs when it comes to credit repair but it can answer some. What is credit repair? Everyone has a credit score.
The Truth About Life Insurance (17)
You can also borrow or loan money against the policy, but if you do not pay the borrowed money and you die, the amount borrowed will be deducted from the death benefit.
The Forex Software System Trading Which Will Help Me Improve My Trading Decisions And Cash Flow (18)
Sorry to say! Back to the software and the advancements it has made in the past few years which has been nothing short of outstanding. The market for the products is expanding significantly and the developers of these systems are pumping in millions of dollars attempting to create the number one system on the world.
Who Benefits From Your Life Insurance (19)
It is a fact that life insurance is one product that most of us will never see the benefits. You will only get the death benefit if you reach the age of 100 which is rare.
Tips For Novice Real Estate Investors (20)
If you do not achieve the success you were hoping for you should not give up on the dream all together simply learn from the mistakes you will make along the way as well as the mistakes that others have made.
Newer Articles Highlighter:
Budgeting 101: A Beginner's Guide (1)
A budget is a plan, a map of the financial future. It should include salaries, bonuses, bills, insurance, savings, and other expenditures. It should be divided into wants and needs and should be organized as a line-item list, with each item categorized and accounted for.
Can Trading Profit And Trading Fear Go Hand In Hand? (2)
Traders who execute based on fear often do not well at all. While fear is one of those helpful emotions when we consider taking a leap from blind decisions, fear often clouds the mind's ability to break through the barriers it creates in order to get down to the elements that decisions should be based on.
How The Estate Planners Help An Individual Or A Company? (3)
There are also intensive week long conferences wherein the person can get immense experience in estate planning. There are many websites wherein the person can get details on where he can find such planners and from whom he can gain experience too.
Criteria For Obtaining The Student Credit Card (4)
The credit card company will issue the student credit card when the student is 18 years of age and be a resident of the place. You must also have an active social security number.
What Is Secured Credit Card? (5)
The basic concept As every one of you might know, credit card debt has been one of the raising problems caused due to credit cards improper usage. People belonging to this category usually end up having credit rating of theirs spoilt to such an extent that another unsecured credit card can't be availed by them any more.
Estate Attorney Detailed Preview (6)
The attorney can offer him with total online support and practise areas. This way, the person can know about the benefits of estate planning. There are also provision of online resources like free CD, beneficiary deeds and qualified personal residence trust for the person.
Types And Ways Of Life Insurance (7)
Topics: Bankruptcy, Loans, Foreclosure, life Insurance, Payday Loans, Debt Consolidation Charles Bretz is a Financial Advisor and Author on Money Matters. Get your Free Money Guide, visit www.themoneypage.org
How To Search Car Insurance (8)
Topics: Bankruptcy, Loans, Foreclosure, How To Search Car Insurance, Payday Loans, Debt Consolidation Charles Bretz is a Financial Advisor and Author on Money Matters. Get your Free Money Guide, visit www.themoneypage.org
The Importance Of Real Estate Lawyers (9)
The lawyers will lend their hands during these long tiring procedures. They will negotiate a suitable price for you from the property seller and pay it off. If you are selling the, you will get a price that you deserve.
Benefits And Risks Of Buying A Personal Insurance Policy (10)
Topics: Bankruptcy, Loans, Foreclosure, Personal General Insurance Policy, Payday Loans, Debt Consolidation Charles Bretz is a Financial Advisor and Author on Money Matters. Get your Free Money Guide, visit www.themoneypage.org
How Do You Know If You Are A Forex Trader? (11)
Learning forex trading is an adventure worth looking into, not every forex system is made the same nor is every forex trader. ForexStrategySecrets.com wants to introduce you to forex.
Commerical Real Estate What To Do Right Now (12)
95% of the reason it didn't work out for them can be traced back to the people they worked with originally to buy the property. If they would've worked with the right person, I guarantee the majority of the time, they would love commercial investment real estate and it would be a large part of their lives.
Learning To Trade Forex - Part 3: A Mentor (13)
Topics: forex education, forex trading, forex trading system, forx, fx, forex system, currency trading ForexStrategySecrets.com gives you the chance to explore forex currency trading and find out if their forex course is right for you.
Commerical Real Estate Key Terms (14)
In other words, in a net lease, the rent is discounted and because the rent is discounted, the tenant does pay all the other expenses. For example, the tenant pays property taxes, insurance, maintenance, etc.
Commercial Properties Income Types (15)
If you hesitate on saying yes, you must definitely do more analysis as to the salability of the property and the area. Not inspecting the entire property prior to closing.
Commercial Property Investing Its About The Numbers (16)
Keep that in mind. It's worth mentioning that you shouldn't make an offer just to make an offer on a property. Many times many investors get caught up with the thought of I've got to buy an apartment building.
The Need For Research When Conducting A Free Property Valuation (17)
This one element is important because it adheres to the truth of any property valuation, "a house is only worth what a buyer is willing to pay for it". Without an understanding of this key factor, a value will never be truly accurate.
Office Buildings, Multifamily, Apartment Building Strategies (18)
There are others that are familiar with office buildings because they are either a tenant or they own a building. Many people in American run their businesses out of office buildings and from that standpoint are familiar with them as well.
Investment Real Estate Values Cycles (19)
But, with the thought in mind, it may be overpriced in the first place. Make no mistake; it's not difficult putting income and expenses together for a commercial property.
Tips And Tricks To Investing In Commercial Property For Profit (20)
Remember, this is where a good broker is worth their weight in gold; how they can direct you as far as price, how to structure the offer, terms, etc. This of course is very, very important.
Permalink to Things To Know Before You Start Investing In Real Estate