Blog Post
Mastering Property Investment | Maximizing Returns & Minimizing Risks
Property Investment Strategies | By: TRC | 03 Jul, 2023
How to make the best property investment?
The word best property investment resonates with two different aspects: property and investment. When we think about property, there can be numerous options that may pop into our minds, but the criteria get narrow when it comes to property investment. It becomes empirical to understand the concern of property investment and how to make our property investment the best.
Property investment is not just buying a property or investing; rather, a holistic approach is required to make it more comprehensive and logical. Let’s take a look and try to understand a few key factors to make your property investment the best.
i) Setting a threshold of return: Every investment is made to earn a greater return, and property investment is not an exception. However, not every investor is in a hurry to make money, and neither is property. Flippers tend to make a faster return because their priority is time. Similarly, few properties require long-term investment or a great deal of investment to make them sellable. In that case, an investor should have a deep pocket and the patience to wait for the right time to earn a high return.
ii) Understanding of the market: Before investing in property, one should be clear about market dynamics and customer preferences. Whether you are investing in a residential project, farmland, buying agricultural land, or commercial property, the return and rate will vary. This mechanism defines the growth rate of your investment. The recent trend advocates investment in commercial space, be it an investment in office space or investing in new commercial setups like malls, shopping complexes, shops, or any other investment. But to harness the dual benefit of property investment, people also tend to invest in residential spaces, which can also be used for their own living.
iii) Government initiative: An intelligent investment means that the investor should not only focus on the local area benefits but also the development plan devised by the government. For investment purposes, selecting a location that is part of a government plan or area attracts more benefits in terms of economic gain and also ensures the safety of your investment. In addition to that, you may also reap long-term benefits, such as tax relaxation.
iv) Investment, not ownership, matters: When it comes to investment, an investor should be clear and focus only on the investment, not the ownership. Famous American entrepreneur and investor Robert T. Kiyosaki strongly advocates the idea and says, "Your house is not an asset but a liability." According to him, an asset means something that puts money in your pocket. However, if we go into detail about it, we find that owning a residential property also attracts various liabilities and taxation, which creates a dent in your return.
v) Making your return sustainable: While investing, we often get fascinated by future income. We count on simple yet unpredictable calculations while calculating the return. The biggest fallacy of all time, "other things remain constant," fades our chances of making it sustainable for long. For example, you buy residential property on loan and believe that repayment of the loan amount will be adjusted with the rent. However, you might find it difficult to let out your property; besides, the property tax and other charges might make it difficult to adjust. Therefore, one should be clear about a second source of income as well.
vi) Using a home equity line of credit: In some cases, you may also make your property a line of credit to get financing for other investments. You can use your home equity line of credit. However, mostly it is considered a second line of credit; therefore, you should be clear about the initial source of funding to exceed your credit line.
In a nutshell, we can say any investment made in property can only bear great return when it is made after the due consideration and keeping the prerequisites in mind. The best property investment is something that meets the criteria for which it has been devised. There can also be various techniques to invest in property but one should be clear that he should not be blindly fascinated with the returns that other is promising or earning rather use a heuristic approach to make his invest best property investment.
