Property investment may sound intimidating to beginners, but seasoned investors will tell you that investing in real estate is one of the surest ways to financial freedom. After all, to quote billionaire and business magnate Donald Trump, “Real estate is at the core of almost every business, and it’s certainly at the core of most people’s wealth. In order to build your wealth and improve your business smarts, you need to know about real estate.” So, take it from the man himself, and let these tips start you on your property investment journey!
Don’t ride the hype
It’s easy to be caught up in the buzz and hype over a certain piece of property, especially when people say it’s ‘the next big thing’ in the market. Remember, you’re dealing with property, not a fashion trend, so always refer to cold hard facts and figures, calculate the risks involved, and analyse its potential for appreciation before diving in. A little research will bring you a long way, and maybe save you from trouble further down the road.
Market and Pricing
If you’ve set your sights on a property in a specific area, the best thing you can do next is to do some research. Find out and compare the prices of surrounding properties. If the property’s price is lower than those in the area, your risk decreases and potential for appreciation and profit increases. It’s important to do market research and compare prices of surrounding properties before buying.
However, this leads us to the next point, which is…
Buy within your means
The saying “don’t bite off more than you can chew” applies to real estate investment too. Beginners are often seduced by the promise of expensive properties that ‘are sure to appreciate within x number of years’, only to discover that their finances are unable to keep up with their ambitions. It is definitely more prudent to start small and grow from there, rather than putting all your eggs in one basket and counting them before they hatch. (Play safe and purchase something that you can afford the monthly mortgage payment for.)
Read & Learn (the Lingo)
When you’re starting out, you’re sure to encounter lots of strange acronyms and complicated-sounding words and phrases. Don’t worry! Just be prepared to do extra reading on property-related terms and articles. *hint hint* Knowing the lingo will give you an advantage in the field. After that, you’ll need to read up on the many aspects of property investment; there are many useful books on the topic, and you can find resources online too.
Go mass market
One of the best bet for beginners is to go for mass-market properties. Sure, a $2 million property portfolio looks good, but let’s face it, there are only a handful of people who will be able to afford properties like that. It’s better to go for properties that are within reach of the average office-worker, like a RM300,000 property, as you can be sure that there will be a market for it.
Think long term
Unless you’re the type to buy property and flip it to make a profit, property investment should always be viewed as a long-term investment. Why? Because real estate are assets that take time to liquidate, and cash tied up in property is difficult to release. It takes time for your assets to increase in value, and it will probably take awhile before you can cash them in for profit.
Plan exit strategies
Don’t play guesswork with the future of real estate market. Just like going into a battlefield, you need to have a clear plan in mind and prepare an exit strategy before purchasing property. That means having a backup plan (or two) in case your Plan A doesn’t work out. Know your market and game plan before starting your property investment journey.