Just because real estate prices seem to have hit a temporary high in many countries around the world doesn’t mean that real estate investment profits are hard to come by.
Even during a downturn in the real estate market, profits from stagnation or depression can be made locally and abroad. This article shows you the top ten tips that real estate investors apply to their real estate portfolio building strategy to ensure the success of their investments.
1) Find the curve – the concept of an existing real estate market cycle is not a myth, it is a fact and it is generally accepted that it is based on a price-income relationship. Check recent historical property price data in the area of the country where you are considering buying and try to determine the general feeling in the market for current prices. Are prices rising, falling, or have they peaked? You need to know where the real estate market cycle curve is in your preferred investment area.
2) Get a head start – as a general rule, professional real estate investors seek to buy ahead of the curve. If a market is rising, they will try to target emerging areas, areas near sites that have peaked, areas near sites undergoing redevelopment or investment. These areas will most likely become “the next big thing” and those that have moved ahead of the trend will be the ones that will make the most gains. When a market stagnates or falls, many successful investors target areas that experienced the best levels of growth, returns and earnings very early in the previous cycle, as these areas will most likely be the first to become profitable when the cycle will begin to turn towards the positive. one more time.
3) Know your market – for whom are you buying a property? Are you buying to rent to young executives, buying to renovate to resell to a family market or buying a jet to rent a property for short-term rental to vacationers? Consider your market before making a purchase. Know what they are looking for in a property and make sure that is what you are going to offer them
4) think further – there are emerging real estate markets around the world where countries’ economies are strengthening, where a growing tourism sector is driving demand, or where constitutional legislation has been or is about to be amended to allow foreign ownership in full ownership ownership for example. Look beyond your own backyard for your next real estate investment and diversify that real estate portfolio for maximum success.
5) Purchase price – set yourself a budget that will realistically allow you to buy what you are looking for and profit from this purchase either through capital gains or a rental yield.
6) Admission fees – search costs, charges and all the expenses you will incur when buying your property – these differ from country to country and sometimes even from state to state. In Turkey, for example, you must add an additional 5% of the purchase price for all charges, in Spain you will need to take an average of 10% into account, and in Germany, charges and fees can exceed 20%. Know how much you will have to commit and include this amount in your budget to avoid any unpleasant surprises and make your investment profitable.
7) Capital growth potential – what are the factors that indicate the potential profitability of your real estate investment? If you look at an emerging market overseas, what economic or social indicators exist to suggest property prices will rise? If you are buying to rent, are there any indications that demand for rental accommodation will remain strong, increase or even decrease? Think about what you want to get from your investment, then research and determine if your expectations are realistic.
8) Exit fees – if you incur a substantial capital gains tax liability if you sell your property investment for profit, will this render the investment profitless? In Spain a foreign buyer can incur up to 35% capital gains tax, in Turkey, on the other hand, property sales are exempt from capital gains tax if the underlying property has been detained for four or more years.
9) Profit margins – what levels of capital growth can you actually achieve on your property investment or how much rental income can you generate? Calculate these facts, then work backwards to your original budget to determine your potential profit margins. At all times, you need to keep the big picture in mind to ensure that your real estate investment has good profit potential.
ten) Think long term – unless you are buying a property off plan and intend to resell it and monetize it before completion, you should view property investment as a long term investment. Real estate is a slow asset to liquidate, money tied up in real estate is not easy to release. Take a long-term approach to your real estate portfolio and give your assets time to appreciate in value before cashing them in for profit.