7 Secrets to Successful Property Investment

Property investment is not easy, it requires long hours of research and legwork to find the best property for maximum profit. In developing investment strategy there are many factors to consider, you may have a capital sum to invest which has been left to you, you may have an amount of money available for investment due to retirement, you may be more interested in investing for income as opposed to capital growth, these are the factors need to be incorporated in to your property investment strategy to make it work for you.

Before you begin invest you need to develop your personal property investment strategy, considering the amount of money you have to invest and the returns you expect to gain. You should also consider your own aspirations as a property investor i.e. do you want to work on the property and increase its value or simply sit back and wait for property to gain in value?

Property investment has the potential to deliver much higher returns than savings, but can also create losses and introduce an element of investor risk that needs to be carefully understood and managed. Property investment has historically provided good returns, but a falling market can create losses, especially in the short term. Over the long term, property does increase in value and it is something that never goes out of fashion.

Why to Invest in Property?

Property has always been considered a good investment because it tends to exhibit less volatility than shares and generally maintains its value, even when other assets are on the decline. It also has the potential for capital growth, meaning that its value increases over time and can also offer a steady income when rented out.

Here are few things to keep in mind while investing in the Indian realty sector:

• Buy & Hold: Buy & Hold is probably the most popular strategy and most new real estate investors start with this strategy. Well it is easy to understand, you buy an investment property and you rent it out and hold the property for the long-term. 

• Long-term: When investing in real estate you need to be aware that this should be a long term strategy. By treating property as a long term investment you are able to maximise your profit and minimise any losses.

• Location: Location factors largely determine the potential yield of your property in the future. Choose the property that is located in a strategic location as close to offices, universities, public facilities and shopping centres. The more strategic location of your property, the sooner the price goes up. If you want to rent it out, a good location is also a determining factor of high rents that you can wear to prospective tenants.

• Research the Market: Once you decide on a location, do your research. Talk to locals, real estate agents and get a feel for the area, then check out recent sales to get a good idea for what property in the area is worth. 

• Plan for the worst or the best: When you buy a property for investment, you increase financial risk to yourself, but you also increase the possibility of financial benefits as well. You should consider what options you have on those properties to grow or fall in value. Plan for every possible contingency and you’ll make smart choices based on the numbers, not emotion.

• Exit: Since you cannot predict the real estate market’s future, you need to have a clear plan in mind when purchasing a property. As a real estate investor, you must know exactly how you will exit the property before you buy it. You must know your market and your plan before you begin to invest.

• Profit Margin: What levels of capital growth can you realistically gain on your property investment and how much rental income can you generate? Keep these facts and then work backwards towards your initial budget to work out your potential profit margins. Keep the bigger picture in mind at all times to ensure that your real estate investment has good potential for profit.

Investing in real estate is not easy. But by taking the proper precautions, it can be very rewarding.

This guest post has been written by Gunjan Johar, Real Estate Analyst and Home Decor Blogger.