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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

The 5 Rules of Real Estate Investment

Housing-Market / Buy to Let Jan 22, 2019 - 02:02 PM GMT

By: OutreachMama

Housing-Market

Like every other form of investing, your primary goal as a real estate investor is to always be in the green. To do that, you have to balance your relentless pursuit of opportunity with an eye for safe deals. By applying the below strategies to your real estate investment, you increase your odds of making the right decisions consistently.


  1. Focus on the Long-term

Unlike stocks, real estate assets do not experience huge price changes over short periods. That’s why every buy or sell decision you make in real estate should be hinged on long-term objectives. Think about how the value and return of each asset will play out over the next 5 years at least.

Still, the long-term focus shouldn’t be misconstrued to mean rigidity. Even when you have a 20 or 30-year strategy, it’s best to break it up into 5-year chunks that make it easier to monitor progress and quickly respond to unexpected events. Remember that no plan, no matter how well it’s laid out, has guarantees. Disruptive and unforeseen market changes can transform what was a profitable investment into one you should be looking at exiting as soon as possible.

  1. Supply versus Demand

The real estate market is driven by changes in the supply and demand of property. The most successful real estate investors are those that can sniff out markets bursting with demand so they can position themselves on the supply side.

You won’t be the only one joining the supply side though, so the dynamics of supply and demand are never static in perpetuity. You have to keep an eye on the market so you can identify shifts that could wipe out your profits. Note that you can stimulate demand through branding. Branding your property can make it attractive for buyers and renters.

  1. Think Micro Not Macro

National news can be pretty misleading or incomplete when it comes to the state of real estate in a country. Such widely focused news often inadvertently glosses over highly profitable pockets of opportunity that may still exist despite what may seem like a nationwide wave of turmoil.

Such heterogeneity is especially likely in large countries such as the United States, Brazil, Russia and Germany where the real estate market isn’t a monolith. The state of the market on one end of the country may be starkly different from what is happening on the other end. Ergo, always keep an eye on the opportunities at the local level.

  1. Brace for the Worst

When buying, selling or seeking financing for real estate, don’t be carried away by excessive exuberance. Always be prepared for the worst. Under no circumstances should your projections be based on the best-case scenario. Doing that could completely wipe out your investment if the worst case were to materialize.

Think about what could go wrong. For example, your closing costs may be higher than you anticipated, property repairs may exceed the budget, or your real estate agent may be unreliable. Develop contingency plans that would kick in when these unpleasant scenarios materialize. Contingency plans could include tapping into a personal loan facility (e.g. see simplepersonalloans.co.uk) to cover unexpected closing costs.

  1. Know that You Cannot Control Everything

You cannot be a consistently successful investor if you do not plan. Research, understand the market, be ambitious, know the boom and bust supercycle, and make sure you are in the right place at the right time. Nevertheless, no person or entity is big enough to control every aspect of the market.

Despite the most elaborate planning, certain events are always beyond your domain of control. When they do occur, don’t panic. Breathe deeply, relax and acknowledge that there’s nothing you could do to prevent such events. Instead, understand that such unexpected incidents can work to your advantage as long as you position your property portfolio accordingly.

These are the most important rules for investing in real estate. Still, while these tips are crucial, always keep an open mind. Don’t crash and burn in rigidity.

By OutreachMama

© 2018 Copyright OutreachMama.com - All Rights Reserved

Disclaimer: This is a paid advertorial. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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6 Critical Money Making Rules