Why You Need To Be Educated Before Investing In Property
Just like with buying any home, whether you're wanting to live in it or not, real estate investing is a big commitment. The decision to buy a rental property is one that you shouldn't take lightly and it's imperative that you're taking all the right steps to create success.
As experts in real estate investing, we cannot stress the importance of becoming self-educated on the investment process. This is because you need time to consider various factors that will support your overall goals and investment strategy.
We've created this article to support those thinking about becoming investors. We aim to provide all our starting and savvy investors with all the relevant resources that will support them on their journey to becoming a successful property investor. Keep reading to learn more!
Why It's Important To Self-Educate
First and foremost, investing in property is a massive decision! Property investment is not a quick way to create wealth and it does take a strategic, long-term approach. Educating yourself will allow you insight into your goals and to better understand what you want your overall investment strategy to be.
Becoming educated on the process is the first step that you should cover off on, on your journey to becoming a property investor. This is because it will give you a run down and deeper analysis into the whole process and the various strategies that you can use to create wealth.
Investment Terms and Jargon
During the self-education process of property investing you will begin to learn relevant terms and jargon. This is essential for you as you develop awareness and can easily make calculated decisions.
Knowing The Best Places To Invest
Something that us investment strategists will always emphasise is, Location, Location, Location! Location is the main factor that will determine the supply and demand of a property. It also determines the overall price and property value.
As a future real estate investor you'll need to research the best markets to invest in. This will provide you with the information necessary to determine your strategy and whether your future rental property will provide you with positive cash flow or capital growth in the future.
If you're researching the location of a property it's important to look at a number of factors. These include; demographics, proximity to basic amenities, how the region is performing in terms of growth, infrastructure opportunities, plus much more. To get a round up of the locational features that you should research in prospective property markets, check out this blog we created.
Your rental yield, or rental return is basically the income that you will get from your rental property. It's determined by calculating your total income and then dividing it by how much you purchased the property for, then multiplying it by 100. In most cases, the higher your rental yield, the better-off you are as an investor.
This refers to the increase in value that your investment property will be subject to over time. It's measured as the current value of the property in comparison to how much you originally purchased it for. If you're an investor looking to generate long term wealth, it's important to consider capital growth projections. This can be determined by a range of different factors including inflation and your property's location.
Your Investment Strategy
Education will provide you with clarification on your individual investment strategy. This will allow you to achieve your overall goals. We have provided some of the most common strategies to consider as a future property investor.
Create Capital Growth: through buying a property and leasing it as it increases in value over time
Create Positive Cash Flow: buying a property and making a profit after accounting for expenses and mortgage repayments associated with it
Buy, Renovate & Sell/ Hold: involves buying an established property and then renovating it to add value
Buy, Subdivide & Sell/ Hold: involves purchasing an established property and then dividing it to make several properties, therefore creating extra profit
Buy & Hold: involves withdrawing equity from a property and then using it to fund your next property purchase
Buy & Sell: buying a property and waiting a period of time to sell it for a profit
Buying Off The Plan: buying a property by entering a contract prior to or during the construction phase of the development with settlement occurring on completion of the build
There are various resources that you can use to educate yourself on the property investment process. They include online resources, books, seminars and our favourite - chatting to an expert. Chatting to an expert will give you deeper insights into emerging and current trends within the investment space. Experts will also provide you with additional first-hand sources of reference.
If you're interested in chatting with an expert, book an appointment today! Our details are listed below. Ph: 1300 130 932