Invest Wisely in Property - 8 Simple Rules

By: James L. Hardcastle

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

Attend what you want to, but ignore the hype. Seminars are a great way to increase your knowledge about this lucrative market, but don't rely on the speaker to give you the real facts. You can, however, learn some great strategies and prepare for unknown factors when investing. The speaker is simply presenting their point of view, you need to come up with your own.

Ask yourself exactly what you stand to gain by going to this seminar. Then, ask yourself what exactly the speaker gets out of it: why are they pushing this particular area of property investment? Look into it and determine if there is money to be made or if your time and money would be better spent elsewhere. Before you invest anything, know all of the facts.

Rule Number Two: Do Not Cut Yourself Short

Factor in all the costs of an investment and make sure than you can really afford it. Leave room for unknown costs (they have a way of cropping up). Compare locations and the costs of different properties and evaluate whether it will be cost effective for you to buy them; remember that there may be repairs needed - factor in the time needed too. You'll also have to be prepared to pay for insurance, inspections of various types, adjustment expenses, valuations, depreciation, mortgage insurance, real estate broker's fees, taxes, utilities and any other costs you may incur while you own this property. Don't rely on others for this information - do your own research. Don't count on income from rents to cover these costs either; be certain that you can pay for all of this without that income.

Rule Number Three: Do Not Assume Anything

You remember what they say about assuming. If you aren't sure, get sure. It's important to your success as an investor to know everything you can before investing. Property investment is not a get rich quick business. You can get rich, of course, but it takes hard work and patience. Know all of the facts at every step of the way. You need to know the asking price, what the calculated return on your investment may be and of course what you'll have to put into the property in order to make a profit on it. You need to know precisely how much rent you will be receiving for this property, how the tenants are, everything.

Rule Number Four: Do Not Ignore the Numbers

Keep an eye on your numbers and never borrow more than you can afford to repay. This property is something you're buying to make money on; you won't be living here. Think of your property as an employee - the more debt you have, the more you'll be spending in interest payments. You have to be able to afford the mortgage whether or not you are receiving rent for the property. Knowing the status of your cash flow at all times is key, as is being prepared for the unexpected.

Rule Number Five: Do Not Become Attached

Remember, this isn't your home - so don't get emotionally invested in the property. Think of this property the way that a prospective renter or buyer might. Think of the property as you would anything else you want to sell - you want to get it into someone else's hands as soon as you possibly can. Think about how much you'll pay for the property and how much of a profit you can make by reselling or renting it.

Rule Number Six: Do Not Do It Alone

Don't go it alone; at least not at first anyway. You cannot be everything when becoming a true property investor. Learn the ropes form experts in the field. It may seem like the right idea to save money, but if you don't seek out professional help for all those steps involved in turning properties for profit, you will wind up losing money in the end. To do things right you will need a property advocate, mortgage broker, property assessor, inspector, and an accountant. It is also a wise idea to get a contractor whom you can trust to make some repairs that may come up from time to time. Be frugal, but no penny pinching allowed.

Rule Number Seven: Do Not Forget Practicality

Keep the practical elements of investment property firmly in mind. A home is a good investment if located near amenities like shops, public transportation, schools and so on. Also, think about quality of life; what is the neighbourhood like? Are the schools good? Is the area generally safe? If the area is disaster prone, you'll need to know that as well. Think of the age of the home too - is the plumbing and wiring modern or will it need to be updated? Is the home sufficiently insulated? Buyers, renters and insurers will all want to know this.

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.

Article Source: http://www.retirementlivingarticledirectory.com

About the author: James L. Hardcastle can show how to wisely invest in property and be successful. Visit "Loans Australia" website for more great ideas on property investment.

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