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Updated by Jacque Opie on Oct 09, 2014
Headline for 10 things to know about investing in real estate
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Jacque Opie Jacque Opie
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10 things to know about investing in real estate

Getting started with and growing your property portfolio can be daunting. Here are some tips on how to avoid some of the pitfalls that many investors fall into.

1

Know your strategy and educate yourself

Know your strategy and educate yourself

There are so many different ways of investing in property. Knowing and understanding what your strategy is will help you target the right kind of property for your risk appetite. Educate yourself on the different types of properties including cash flow positive, cash flow negative, renovation, building etc.

2

Have an exit plan

Have an exit plan

Much like running a business understanding that a property portfolio should have an exit strategy is very important. Whether this is through your will, or whether you choose to sell a property periodically to manage your lifestyle.

3

Speak to your accountant

Speak to your accountant

Become educated on what tax deductions are available to you based on your current income and assets. This will also help you determine the best property strategy for yourself

4

Shop around

Shop around

There are so many different ways of acquiring properties. Look at all the options. This includes discussions with real estate agents, private sellers, builders and finance brokers. Don't limit your options when it comes to acquiring an investment property.

5

Get your finances ready

Get your finances ready

Having your finances ready means you have flexibility and options when the right property come up. It also means that you have some negotiating power. A tip though, when making an offer, always protect yourself. Don't overexpose yourself. Having finance ready will also save time and energy as you will only be looking for properties in your price range.

6

Do the numbers

Do the numbers

Know exactly what you outgoings are on a specific property so that you know what your return on investment is. This is different to just meeting with your accountant. This is understanding things like depreciation, what you can claim, anticipated longer term expenses, and factoring in any maintenance etc. Then make sure the number stack up - and this may not be the case in the short term, but it must fit your long term strategy.

7

Keep emotions low and intelligence high

Keep emotions low and intelligence high

The advantage to buying an investment property is that you don't have to live there! Just like investing in shares, yes, the company has to be sound, but you don't need to like the decor. Buying an investment property is the same. You still make sure the property meets your criteria, like location, suitability for your target tenants, etc. But if you don't like the carpets, so what. Staying neutral is important, and focused on the overall goal.

8

Consider who will manage the property for you

Consider who will manage the property for you

Are you the type of person who is likely to want to manage it yourself? If so, know what you are getting yourself into. Choosing an agent to manage your property takes care and consideration.

9

Don't listen to everybody else's opinions

Don't listen to everybody else's opinions

Everyone knows something about real estate, and has an opinion on it. Whether you should or shouldn't buy now, what strategy to use etc. Set your own path, make a decision and act on it. Be picky about who you take advice from! Trust yourself and the research you have done.

10

Have the courage

Have the courage

Lots of people say they were going to do it but..... They have all the excuses in the world for not doing it. The truth is, to make a difference in your finances, something has to be done. It takes courage to do it. Once you have done your research, JUST DO IT!