The 4 Foundations of Solid Property Investment

If you’ve ever tried to manoeuvre your way through a minefield, then you have an idea of what investing in property is like. It’s full of risks, difficulties and disguises at every turn. But the rewards can be great, and with the right manoeuvring, you can make your way out of that minefield and into a fruitful and successful investment.

If you’re like so many entrant investors, you’re probably already boggled by how many contradicting things are being said about finding success in property investment. What you need to know is that in the end, there are just four pivotal elements you need for secure property investment. With these four, your chances of going through property investment unscathed and successful will be a lot greater.

Four Pillars

Like a solid house or sturdy table, property investment has four pillars that keep it solid and standing, even through the toughest times and markets:

Prime Location – Location, location, location. That’s what everyone in the real estate business keeps repeating, and rightly so. Location is one of the most important factors that can make or break a property investment.

Location here means more than just the aesthetic or physical attributes of the location of the property. It encompasses the property’s proximity to numerous conveniences, like schools and central business districts. It also means a good and peaceful neighbourhood, one that’s free of crime, natural disasters and the like. Such a property will always attract interest.

Solid Construction & Excellent Design – While location may be important, the structure of the property itself is also equally important. A rundown shack placed on the most exquisite location is still a rundown shack. It is vital to ensure that your property looks and is at is best. Good, solid construction combined with an attractive yet sensible design make for a winning real estate combination that buyers and renters will find hard to resist. If achieving this means spending a little more on construction and renovation, go ahead because this is one aspect you really shouldn’t scrimp on.
Functionality – Similar to people, property should not only have the looks, but the substance. They should not only be attractive, they should also be functional. This means that they should possess the qualities that fit their purpose: residential properties must be conducive for living and buildings and offices should be conducive for working. Buyers and renters may be attracted to the exterior of a home or building at first, but it is the usefulness of the space that really wins them over and makes them want to stay for good.
Financial Stability – Start off having the means to finance your investment property, don’t rely on returns alone. Demand for property can be very unpredictable, and you never know what other problems could come up that will add to your expenses. A pipe could suddenly burst, or an earthquake might suddenly shake your property’s foundation. You need to have the finances to face these kinds of emergencies and solve them, because returns alone will not cover these and pay for the property at the same time.

Is Your Property Investment Showing More Growth Than Unit Trust Investments in South Africa?

This article is intended to focus your attention on how important growth is in your personal savings environment, to make sure the investments in your portfolio are working for you and not against you.

Property investment versus Unit Trust investments can be very interesting and statistics are needed to help us understand… which is the best?

According to statistics from House Prize South Africa, Nominal Property Growth from 1981 to current has been 10.6%, but when you take inflation into account your Real Property Growth was only 1.2% to date.

In short, your investment should be tested against the growth of inflation, and should perform better than inflation. Even if it is growing somewhat, if it is not performing better than inflation, it is essentially losing steam. The term Real Growth is used when you minus your investment percentage with the inflation percentage.

Unit trusts a Great Alternative.

Registered Unit Trust investments are a safe alternative. Companies cannot run away with your money; you can only lose money if the fund performs poorly.

If we look at some top performing SA Unit Trust Companies Funds, we see that some of them had an average 10-year Nominal growth performance of about 17.8%. Over the past year, growth was at 12.2%; and since the Inception of 1999, the average Nominal growth has been 19.9%, while the average inflation for this period was 5.9%.

This means that the Real Growth was a very good 14%

According to published figures Unit Trusts investments has out-performed Property as an investment vehicle.

Safety and access to your money also plays a big role! How safe is your property investment? How much are you paying in property taxes per year? You can sell your property if you urgently need money. However, if this time period is not going to be favourable, then how quickly can you re-finance property to get money? If you can’t afford your Bond re-payment then you will have to sell your property in-time and perhaps at a loss.

In other words, if you have invested in property how quickly are you able to make this investment liquid?

Double Your Money

The golden rule with Unit Trust investments is to double your money every 5 years. Should you invest a lump-sum amount of 100 000 your investment will be 200 000 in 5 years. With this type of investment there is also no term restricting you when you can withdraw your money.

With a good Unit Trust investment, your capital should grow more than the average property investment, and your money will be more easily accessible should you need it urgently.

Real Estate Investing Programs – Do You Want To Learn More About Property Investments?

The significance of property investing programs should not be under estimated. If financial freedom is one of your goals, investing in property can be one of the wisest decisions you could make. When it comes to property investment, you can run out of money if you make the wrong moves and unsure of what you are doing.

There are so many things that you have to know prior to considering a property investment career. To educate yourself, you may consider real estate investing courses or classes that can teach you different strategies that have been proven to be effective by the experts. There is so much to learn before you even start with property investment.

The laws that surround property investments are stringent and you should be aware of that prior to even making an investment. When you get yourself into the property business, you may consider speaking with an attorney who specializes in tax laws that govern properties. It can be a good decision to have yourself informed about the associated laws to prevent any mistakes from occurring while you are looking for properties.

Aside from learning from other people, property investing programs can keep you informed about what methods to take and not to take. Generally, these programs will let you know of the common mistakes that many real investors often make. This could help you avoid making the same mistakes too.

You can also learn the secrets of other people about how they build lasting riches with rental properties. The key to a successful property investment venture is to have the right education about all that may be involved. The help that you can get from property investment courses can be a life saver.

Even professional property investors join real estate investing programs to improve their skills. Both learning through networking with others and reading articles on the Web or taking online courses can result in a successful property business. Just make sure to follow a system that truly works.

Most programs are geared towards helping potential or experienced property investors find the right kind of property for investment. With these programs, you can learn how to cause your investments to bring you large returns. You just have to learn how you can watch your investments as well as valuable information you may need to make higher profits.

Buying a Rental Property Investment – What Are the Keys to Making an Informed Decision?

I can remember my mother drumming into me from a very young age;

“Save your money, get a deposit and buy a house. You can rent it out and the tenants will pay it off for you.”

Things were much simpler back then and there were no complicated property trusts, very few bodies corporate, water was free, and interest rates both low and fixed.

So in general you needed to do a lot less homework before you could see if the numbers added up. You also weren’t seduced by properties in beautiful resort locations with swimming pools, gyms, access to the beach, and the thought of being there on holidays and renting it out when you weren’t there.

So if you are thinking of buying a rental property investment, there are a few key points of which you need to be aware.

Firstly do your sums. You need to know how much money you can afford, how much money you can borrow, what the potential rent will be. Are you going to get a mortgage? Will the lending institutions loan on that particular property?

In some countries there are particular construction types on which lending institutions are unlikely to provide finance. In other areas there are issues with various types of titles, particularly company titles, where the lending institution is unable to take a lien over the property, so won’t advance money.

Be aware of seminars and forums that promise you untold wealth and fortune by buying properties through them. If it were that easy they might not need to run seminars for a living. That’s not to say many of these property seminars won’t provide you with a wealth of information, often they will, but I have seen too many people caught up in the enthusiasm of the moment. Then they rush in and buy before looking at all the options.

Of course there is also location, location, location, it doesn’t matter whether it is where you would like to live, or where you would like to invest. The location is of prime importance. At the end of the day, depending on the type of rental property investment you purchase, you want to buy a property in which other people want to live or holiday. So it needs to fulfil all the requirements of as wide a market as possible. Close to facilities, schools, shops, entertainment, or if a holiday rental, the beach and tourist parks.

There are two further critical points for you to consider. The first is not to confuse your holiday plans with your investment. They should be two completely separate strategies. If you end up at some stage with them coincident, then fine, but it must be for the right reasons. Your strategy for your holiday is probably that you want to see, or be in a particular place at the lowest cost. The strategy for your investment should be about making the most money at the least risk.

See the obvious pitfalls here?

You will want to be in your holiday rental property in the prime time when everyone else is going to pay a premium. Ask yourself if you would be prepared to pay as high a tariff at that particular location, at that particular time, as you intend charging. If the answer is no, then for every holiday you spend there you are effectively losing money, money that someone else will pay.

The second point is that it is often a good idea to have your investment close by where you live so you can keep an eye on it. Whilst there are many good letting agents out there to look after your property, owning an investment that you drive past on your way to work, can provide you with a measure of comfort. There are also other advantages. It is probably an area you know quite well, and will therefore be more closely attuned to both the rental and sales market in the area. Likewise you will likely be more aware of other potential investment opportunities in the area.

Property Investment – Does It Make Financial Sense?

Even in tough economical times, you will notice that a lot of people are still considering property investment. So, why is that? It is because of high rental demand! Over the years, rental properties have seen an increase in demand possibly because of the lack of their ability to get financing from banks to purchase their own homes. Even people who could afford to have their own home are opting to rent a home to have a place to live simply because the market can be so volitile.

Getting a mortgage is quite hard these days. So, once you purchase a property, make sure it will be tenanted. Here are some things that you should take into account in order for you to become a successful property investor and fully understand why investment in property is still a lucrative investment to consider.

Buyers Market

This is absolutely your market if you have the budget since there are so many sellers who are desperately offering great discounts for their properties just to have them sold so they can save their credit and avoid a forclosure. In other words, the market is definitely favorable for you as a purchaser rather than the property seller.

Value Control

One great thing about property investment is that you are in total control of its value. You may have the property price increased when selling. For instance, you can add features or may redevelop the property. You can simply add more value to the property even just by remodeling the kitchen or adding furniture. Compared to other investments, you can control the value of a property without waiting several years for its value to appreciate.

Low Risk Investment

In spite of all the economical doom and gloom as well as the red downward arrows you see in some news reports, property is still a somewhat low risk investment. This means that over time, your chance of losing money is placed on the low category. A risk category comes for every sort of investment, from high to low. So, this only means that you have a greater chance of having your investment financially profitable when you consider property or real estate as in investment as long as you take your time and do your due diligence and know your numbers.

Portfolio Growth

One of the most excellent things about becoming a property investor is the capability to grow a portfolio at a fast rate. For instance, some investors wish to grow their stocks within a year, where as other investors can grow their portfolio in just a few months and can even add more properties.

Once you get to understand property investment more and how it works, you can surely develop a good purchasing strategy that you can use and will enable you to grow your portfolio as fast as you are comfortable doing so. However, I would caution you to not go crazy and use equity from other properties you own to buy new properties without having a nest egg set aside in case the market turns up side down. I’ve prepared some powerful real estate investment information for you below, enjoy!