One of the beauties about property investment is the fact that if you ask 10 different property investors about the best strategy to use you will likely get 10 different answers. While each and every property investor around the world will have their own agenda, their own guidelines and their own ultimate target there are number of factors which each and every member of the property investment community needs to be aware of.
The major factors which need to be taken into consideration include:-
The bottom line is that you can have the best property investment in the world, a home with every mod con and numerous rooms but if you are in the wrong area and there is no investment demand for property then you will not do as well as you should. You need to be aware of what is going on around the area, potential changes to the type of housing and people as well as any major investments which may hinder or help your own investment.
Those property investors who look purely at the property and ignore the surrounding area are the ones which are left with the properties nobody wants to buy. At the end of the day if you are investing in property you need at some point to know where your exit route will be. Having your investment funds tied up for an undefined period of time waiting for a location to come back into favour can and has been very costly for many investors.
While this seems like a very obvious element to property investment many people will forget to negotiate when buying an investment. The bottom line is that any property is only worth what property investors are willing to pay and in some cases (as we are seeing in the worldwide property market today) the perceived value of a property can be very different to what a buyer might pay. For example if you were to pay 10% over the odds without realising this, you would need to see a 10% increase in the market before you are able to at least get your investment back.
The best way to gauge whether you are paying the right price or not is to look at the price of properties in and around the area you are interested in, comparing like-for-like and seeing if the figures still stack up. While maybe not as simple in practice as it may sound in principle you really need to err on the side of caution for your own benefit. Those who chase prices for the sake of it are the ones who will not last very long in the property investment industry!
When to buy
The timing of any investment, whether this be property or a stock market investment for example, is vital and something which should be towards the top of your checklist. However many investors have differing opinions on when to buy which can often related to their overall investment objectives and risk strategy. Those who are maybe looking to enter markets at an early stage and are prepared to take some risk may well see a greater increase in the value of their investment if their assumptions are correct and everything goes to plan.
However at the other end of the spectrum we have long-term investors who would prefer to see new markets developed and more stable before investing on a longer term basis, without the risks which early investors may have taken. The exact timing of when to buy depends upon the investor’s investment strategy and the local and international markets in general.
When to sell
Many people have seen a lot of their hard work undone by selling at the wrong time as this is as difficult as it is to buy at the right time. However, you need to go into any investment with a planned exit route even if the strategy is adjusted or changes along the way. The more successful property investors will always have an exit route in mind and would not normally deviate an awful lot from their initial target.
Fear and greed are two emotions which need to be kept in check as they can both be very costly for a property investor. The greed factor can see an investment retained longer than it really should be and leaves an investor with the potential to be caught out if a market correction were to take place (or a collapse as we are seeing today). The fear factor can also be as deadly with some investors literally dumping stock as they fear the worst, whether this may or may not happen.
Throughout history we have seen time and time again situations where euphoria can quickly turn to the doom and gloom we are seeing today and literally force investors to reassess their situations overnight. Sentiment is the strongest element of any investment market in the world and once this changes it can be very difficult to turn around.
Do not overextend your finances
As we have covered above there are many issues to consider when buying and selling a property and you need to make the decision-making environment as simple and uncluttered as possible. Over extending your finances from day one will add further pressure to your investment and could see you sell too soon or too late purely because of the added pressure of knowing that your financial situation may not be secure. You should only invest funds which you can afford to lock away for some time and if debt needs to taken on then you need to ensure you can afford the financing costs with ease.
There are many different factors to consider when buying and just as importantly selling a property that no one strategy or solution can possibly fit everyone. You need to work on a strategy would suits your particular situation, investment objectives and risk strategy because if you try to work under rules which you are not comfortable with you are at a major disadvantage before the real fun even begins.
By all means listen to the opinion of others, take on board what they say but ultimately it is your money and your future which is at stake and only you know what you can and cannot afford to take on.