Creative property investment know-how

Apr 21, 2017 | Features, Property Investment, Uncategorized

Those who are most successful at investing in property understand that there are certain core principles that can’t be compromised. But sometimes, you also have to show a little creativity.

For property investors, nothing is more crucial than gaining knowledge. Those who take the time to educate themselves and do thorough research are the ones who are most likely to set themselves up for success. The world’s greatest investors, whether they are putting their money into companies, properties or ideas, don’t invest in anything they don’t understand. Simply put, if you know what you are doing, you are reducing your risk. The biggest threat to your wealth is often your own decision making. The more you know, the less likely you are to make bad choices. That starts with educating yourself about property investing in general. Understand the principles of leverage, cash flow and investment yield, and set yourself related goals.

Essentially, this means running your investments as a business. Don’t think that property is a passive investment: to gain the most value, you need a business to guide every investment you make. From there, you can get into the specifics of where and what you want to buy. This means gaining a deep understanding of the market. Many of the most successful property investors are specialists. They know that they have a better chance of good returns if they focus on a particular kind of property in a specific area. This might limit their opportunities, but it drastically increases their chances of making informed and profitable decisions.

It is also critical that you never buy a property without also knowing what your exit strategy will be. This is easier if you can clearly define why you have added a property to your portfolio in the first place. By doing so, you can clearly see when it no longer meets your criteria. In addition, don’t get tied into underperforming investments. If a property is no longer delivering your desired rental yield or something has fundamentally changed in the market, then be prepared to walk away. Your capital may be better deployed elsewhere. Finally, remember that you can’t know everything so surround yourself with people who can add value. A good attorney, a knowledgeable accountant, informed estate agents and a smart tax specialist can save you a lot of time and money. They can advise you on the most efficient ways to run your property portfolio and help to ensure that every decision you make is based on the right information.

Credits: Photos: iStock by Getty Images, Text: Patrick Cairns