In property investment, there are eight rules which you have to follow - these are known as the eight "must nots." If you keep these rules in mind, plan ahead and put in some hard work, you'll become successful in property investing. These rules are simple; you don't need seminars to get information, don't assume anything, don't go it alone, don't become attached to property, don't cut yourself short, don't limit yourself, don't ignore the numbers and don't forget to be practical. Let's have a closer look at these rules.
Rule Number One: Do Not Rely on Seminars for Wise Investments
If you really want to go to a seminar, by all means do so; but don't get caught up in the hype. You can learn a lot of general market information from seminars, but don't count on the speakers to give you useful, specific information. You can learn strategies and how to prepare for unforeseen circumstances, but remember that the speaker is just expressing their opinion; and you have your own.
Ask yourself what information you can walk away with. Then think about why they are pushing that area of property development. Find out if it's really lucrative or if you could do better elsewhere in the market. Be sure to do you research and really get in the know before attempting to invest in anything. Then come up with a plan that keeps your portfolio safe and that you can use to safely invest with.
Rule Number Two: Do Not Cut Yourself Short
Think about all of the potential costs of an investment and decide whether or not you can realistically pull it off. There are always unforeseen costs which will come up, leave yourself some wiggle room for these. Compare the costs of different properties to evaluate whether or not it will be worthwhile for you to buy. You have to be ready to pay for inspections, broker's fees, taxes, utilities, depreciation and all sorts of other expenses that may come up while you own this property. Don't rely on rents to pay for these costs; you should be sure that you can cover all of these expenses without receiving any rent from the property.
Rule Number Three: Do Not Assume Anything
Don't assume anything. ever. If you don't know for sure, you don't know, so stop trying to fill in the unknowns without solid information. Instead, make it your business to find out. This is not a get rich overnight scheme; it's a get rich with hard work and diligence game. So make sure you know cold, hard, solid facts for every step of the way. First with the asking price, third with the taxes and fees, then the calculations of returns, and not to mention what you will need to turn this property over for a profit. Make sure you know exactly how much rent you will get out of the property, and what the tenants are like, don't guess. Take the responsibility to find out everything.
Rule Number Four: Do Not Ignore the Numbers
Watch your numbers. Do not borrow more than you can afford. Remember, this property needs to make you money, it's not where you will be living. Think of it as an employee. So the more debt you have the more interest you pay. So you must be able to afford to pay the mortgage regardless if you receive rent or not. Watching your overall cash-flow is definitely important. Remember to be prepared for the unknowns.
Rule Number Five: Do Not Become Attached
Don't get attached to the property you are buying. Look at the numbers and let them be your guide. You need to think of the house the way potential buyers or renters would. You're not going to live there - so rather than thinking of it as your home, think of it as any other commodity; you want to sell it as quickly as you can. Think about the purchase price and how much you will make by selling or renting the property.
Rule Number Six: Do Not Do It Alone
Trying to go it alone, at least at first can be a huge mistake. Remember that you are not yet an expert in everything, nor do you need to be. Learn from the experts. While going it alone may seem like a good way to keep your costs down, it can lose you money in the long run. Do things the right way - you are going to need a property lawyer, a mortgage broker, a property assessor, an inspector and most certainly an accountant. Having a trusted contractor in your corner will also make things easier. Be frugal, but not miserly; cutting corners now will only cost you later.
Rule Number Seven: Do Not Forget Practicality
The practical factors, will to an extent, determine the resale value of the property. Being near shops, schools and public transportation are all things to look for. Also, evaluate the neighbourhood. Is it safe? Are the schools well regarded? Knowing about the age of the home is important too. You should know if the wiring and plumbing are antiquated, if the home is well insulated and how it is heated and/or cooled. These are all things which buyers, renters and insurers will ask you.
Rule Number Eight: Do Not Limit Yourself
Each time you buy a property, it gets easier. You'll learn from each investment and will grow as an investor. You'll begin to grasp how to take advantage of the market trends. Don't limit yourself to just one investment.
Why Seek Help?
You need a good mortgage broker who can get you the best loan for your investment needs. If banks turn you down, perhaps you can find a creative financing expert who has other ideas. Property investing takes a lot of work and dedication - as well as a willingness to seek out the help of experts when needed. With the right mortgage broker or other financing expert in your corner and sufficient research, you can make wise investments which will make you a tidy profit.
Rule Number One: Do Not Rely on Seminars for Wise Investments
If you really want to go to a seminar, by all means do so; but don't get caught up in the hype. You can learn a lot of general market information from seminars, but don't count on the speakers to give you useful, specific information. You can learn strategies and how to prepare for unforeseen circumstances, but remember that the speaker is just expressing their opinion; and you have your own.
Ask yourself what information you can walk away with. Then think about why they are pushing that area of property development. Find out if it's really lucrative or if you could do better elsewhere in the market. Be sure to do you research and really get in the know before attempting to invest in anything. Then come up with a plan that keeps your portfolio safe and that you can use to safely invest with.
Rule Number Two: Do Not Cut Yourself Short
Think about all of the potential costs of an investment and decide whether or not you can realistically pull it off. There are always unforeseen costs which will come up, leave yourself some wiggle room for these. Compare the costs of different properties to evaluate whether or not it will be worthwhile for you to buy. You have to be ready to pay for inspections, broker's fees, taxes, utilities, depreciation and all sorts of other expenses that may come up while you own this property. Don't rely on rents to pay for these costs; you should be sure that you can cover all of these expenses without receiving any rent from the property.
Rule Number Three: Do Not Assume Anything
Don't assume anything. ever. If you don't know for sure, you don't know, so stop trying to fill in the unknowns without solid information. Instead, make it your business to find out. This is not a get rich overnight scheme; it's a get rich with hard work and diligence game. So make sure you know cold, hard, solid facts for every step of the way. First with the asking price, third with the taxes and fees, then the calculations of returns, and not to mention what you will need to turn this property over for a profit. Make sure you know exactly how much rent you will get out of the property, and what the tenants are like, don't guess. Take the responsibility to find out everything.
Rule Number Four: Do Not Ignore the Numbers
Watch your numbers. Do not borrow more than you can afford. Remember, this property needs to make you money, it's not where you will be living. Think of it as an employee. So the more debt you have the more interest you pay. So you must be able to afford to pay the mortgage regardless if you receive rent or not. Watching your overall cash-flow is definitely important. Remember to be prepared for the unknowns.
Rule Number Five: Do Not Become Attached
Don't get attached to the property you are buying. Look at the numbers and let them be your guide. You need to think of the house the way potential buyers or renters would. You're not going to live there - so rather than thinking of it as your home, think of it as any other commodity; you want to sell it as quickly as you can. Think about the purchase price and how much you will make by selling or renting the property.
Rule Number Six: Do Not Do It Alone
Trying to go it alone, at least at first can be a huge mistake. Remember that you are not yet an expert in everything, nor do you need to be. Learn from the experts. While going it alone may seem like a good way to keep your costs down, it can lose you money in the long run. Do things the right way - you are going to need a property lawyer, a mortgage broker, a property assessor, an inspector and most certainly an accountant. Having a trusted contractor in your corner will also make things easier. Be frugal, but not miserly; cutting corners now will only cost you later.
Rule Number Seven: Do Not Forget Practicality
The practical factors, will to an extent, determine the resale value of the property. Being near shops, schools and public transportation are all things to look for. Also, evaluate the neighbourhood. Is it safe? Are the schools well regarded? Knowing about the age of the home is important too. You should know if the wiring and plumbing are antiquated, if the home is well insulated and how it is heated and/or cooled. These are all things which buyers, renters and insurers will ask you.
Rule Number Eight: Do Not Limit Yourself
Each time you buy a property, it gets easier. You'll learn from each investment and will grow as an investor. You'll begin to grasp how to take advantage of the market trends. Don't limit yourself to just one investment.
Why Seek Help?
You need a good mortgage broker who can get you the best loan for your investment needs. If banks turn you down, perhaps you can find a creative financing expert who has other ideas. Property investing takes a lot of work and dedication - as well as a willingness to seek out the help of experts when needed. With the right mortgage broker or other financing expert in your corner and sufficient research, you can make wise investments which will make you a tidy profit.
About the Author:
Author: James L. Hardcastle can show how you can sensibly invest in property and be successful. Visit "Loans Australia" website for more great ideas on property investment.
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