Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. Real Estate is one of the most powerful forms of investment which many people have become wealth from. On that same vein, it isn’t an investment class for everyone. The following contributed post is thus entitled; Is Property The Right Investment For You?
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Property is one of the most popular forms of investment for a reason. It’s consistently shown itself to be one of the most effective investments out there and, if handled correctly, can be a source of some serious revenue. The problem is that this makes a lot of prospective investors assume that make a profit from property is easy. That they will be able to sit back and watch the money roll in from a succession of reliable tenants without having to lift a finger. Now, this would be very nice, but sadly it’s just not the way things work in the real world. Instead, investing in property is an extremely complex endeavour that requires you to commit a great deal of both time and money. Here are three things that any anyone considering investing in property should be thinking about.
What type of property?
This should be your first question. Before you figure out how much you want to be earning from your properties, you have to figure out what sort of properties you want to invest in, in the first place. There are, of course, plenty of options out there but what you choose will depend on your needs and desires as a landlord. If you’re looking for a high tenancy turnover at highly competitive rates, then consider purchasing student property. Students are an extremely reliable source of tenancy, but they rarely last more than a year or two in the same place. If you want something more reliable, a long-term tenancy with a family or older person might be more suitable. Of course, you should also look at commercial properties. These types of properties can involve more work and investment but can generate some pretty significant returns. Fortunately, there are plenty of places online where you can learn more about the various property options available to you. Just make sure that you do as much research as possible.
Will you need help?
Did you read the last paragraph and start to feel a little overwhelmed as you realized the number of options available to you? Well don’t worry, it’s not the end of the world. Just about every property owner requires help in certain areas. It’s a great idea to find a lawyer who can help you better understand the various options that are out there as well as the kinds of complex problems that you might find yourself coming up against. Not every property owner is an expert in legal terms and revenue codes, so there’s nothing wrong with needing some assistance.
How much work are you willing to put in?
This is one of those questions that even seasoned investors can sometimes forget. When deciding on a property, you need to ask yourself, “how much work am I able to put into this place?” Depending on the type of property you invest in, you could either be able to let it take care of itself, or find yourself making frequent visits and shelling out a fair amount of money on repairs and maintenance. Always weigh up your initial investment with how much you’ll be spending down the line. If you’re less inclined to make endless repairs on a property then perhaps you should consider making a larger initial investment. If you don’t have the capital to put down, then understand that you might be paying that extra money over the long term in maintenance on the property. The truth is that if you start looking at property investment as some kind of “get rich quick” scheme then you’re almost certainly going to end up either disappointed or in some serious financial difficulty. Being able to successfully invest in anything is a lot of hard work and there are few things more difficult than being able to get a profit out of your properties if you’re not willing to work for it.
What are the risks?
Property is historically one of the more secure investments that you can make. Unlike things like stocks and bonds, the rise and fall of property prices tend to be pretty gradual which means that you’re not necessarily as likely to get hit with a sudden drop in the value of your investment. However, that being said, that doesn’t mean that there are no risks inherent to property investment. The truth is that all investments, no matter how secure they might seem, are going to involve at least some degree of risk. You just have to decide if this is something that’s worth it for you at all. The most important thing that you can do is to keep a close eye on the movements of your investments and understand what the best way to deal with any risks or fluctuations that might come up is. Sure, this is can be complicated and difficult to do but if you’re not prepared to put in the work required to get the most out of your investments, then it might not be the right decisions for you in the first place.
Of course, it’s important to remember that property isn’t the only investment option out there. Whatever you choose to do with your money, it’s important that you choose the right investment options for you. After all, everything from how much capital you actually have to invest in the first place to what kind of time frame you want to be looking at in terms of your investment to how much profit you’re looking to make are going to have a huge impact on the choices that you make when deciding where to put your money. As with just about everything, the key is to make sure that you’re putting as much effort into researching your options as you possibly can. If you’re not keeping a close eye on the kinds of options open to you then you could well end up missing out on something incredibly lucrative or missing a detail that lets you know that you’re about to make a pretty serious mistake.