Asia Property Investment as a Route to Riches

By Patrice SARDA - CEO Harvest Property

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There are no legitimate get rich quick schemes and everything that is worthwhile doing, is worthwhile doing properly so that you end up with the end goal you were after. When it comes to making money from property investment, the same rules apply. You have to put in the homework and the time and effort to end up with a profit at the end of the day. You can start off by looking at the types of properties available and decide on the type of properties you would like to own. You could specialize in commercial property, land, offices and so forth or look at the personal property market centered around multi-apartment buildings, single-family homes or individual apartments. You may even decide to look at investing in properties in other countries if you have a viable market there to work with. Once you decide on the type of property or properties you might want to work with, you can decide on your strategy. Many people buy properties to do maintenance, upgrades or retain for a short period of time and then resell the property to earn a profit, others look at purchasing properties to be used as rental premises which are rented to tenants and retained for a longer period of time. Your choice can be individual, market related or even personality dependent, but there are still a few hints and tips that may come in handy when you start your property investment portfolio.

Purchase to own:

When you work on buying a property to keep for a relatively long period of time, you are bargaining on the growth of the property market during this time period so that you earn a profit on your investment when you sell the premises. Historically speaking, property increases on average 5% to 10% ever year in most countries although this can differ dramatically based on locality. This means that patience can see you earning a lot larger profit than if you turn over the property in the short term. There are ways to make money with quick turnovers, especially on distress sales, auctions and so forth, and this can assist you in gaining some much needed cash in the short term, but does not offer as large a pay out as a longer term investment.

Budget well:

When you purchase a property for your own use, you need to cover the mortgage on that property yourself. When you rent out properties you have purchased, your tenant will be contributing some or all of the mortgage bonds pay back on a monthly basis. While you may have the cash to purchase a property, you can build up a good credit history and be in line for ever increasing loans from the bank if your mortgage is paid well every month. You need to ensure that you can cover the cost of the mortgages, taxes, levies and any maintenance that needs to be done on the premises, even if your tenant defaults for some reason. Skipping payments can result in losing your properties and ending up with a poor credit score, which could mean you may not be able to take a loan again. On rental properties, the right choice is a property that allows you to rent to tenants for enough money to cover all associated costs and still leave you with some money to play with afterwards. When you have to pay in money monthly to retain the property, this can put a strain on your finances and end up being a drain on you personally. Avoid properties that leave you with nothing in hand at the end of the month, you will not gain wealth from these types of investments.

Brain versus heart:

When you purchase a property, even if it is for yourself personally as a family home or an investment property, you need to make sure that your investment makes sound business sense. Purchasing a property because you fell for a story or a view or because it has a nice pool could be your undoing. The price you pay for a property should be in direct relation to it's value, it should meet your needs while still being within budget and affordable. Investment properties should also be bought using your brain and don't let emotions direct you into a purchase you will later regret.

Check the area:

Doing your research in to the community and the developments happening in a specific area could also make or break you in the property business. If you purchase property that is in an area that is becoming deserted and derelict or is filling up with business premises or any other number of things that could negatively impact on the value of premises, it may end up costing you when you sell the property as you may not be able to recoup your initial investment. When you buy in a good area that is showing housing development of upscale homes or perhaps buying a business premises in an area that is developing as a marketing hub, you are likely to show a marked and fast increase in value for the premises you have bought. When purchasing homes, you might also want to have a look at the facilities nearby that could also impact on the number of tenants available or people wanting to purchase the property later on such as schools, access to main roads and so forth. You need to also check on the average rental prices in the area you are planning to purchase your property to ensure that your repayment values plus extra costs will not result in a rental that is far too high for the area. Better properties in good areas will bring in the best rentals, but end average properties in a good area will bring in a much better income than the best properties in a bad area.

The first law of investment property:

Don't overpay for the property! If you purchase a property below market value, you are already on the way to a profit but if you buy an overpriced property, at rates higher than market value, you have already caused a drain on your investment finances. The more expensive the property and the less likely you are to gain a rental to cover the cost of the mortgage and other associated costs, the more you will end up having to pay in every month. This goes against the entire principle of purchasing property to make money.

Finance the properties:

In most businesses, cash is king, but not necessarily the case when it comes to purchasing property. Using money from the bank or other mortgage bond providers means that you then have cash to spare for fixing up a property or buying a place for a quick turnover or even for another premises purchase. When you build up a reputation with a lending institution, they are also a lot more likely to offer your greater loans at a later stage.

Education is key:

In this field, it may seem that you could just jump right in with both feet and make some quick capital. While this may be possible, losing a large chunk of capital is a lot more likely if you have not educated yourself on the subject. Make sure you understand the regulations, the trends on the market, get the basic idea of property valuation and find out how to scout the developments in the area. It will also benefit you to have some basics on building and construction to determine issues in a building and also if the repairman is overcharging. It might also be good to take a leadership or public speaking course or gain some insights on dealing with people such as the people at the lending institutions, your tenants, the repair people, the construction workers and more. Being able to communicate effectively will go a long way towards ensuring your success in this type of business.

Succeeding in business takes drive and motivation. When you decide to make some money with property investment, you need to educate yourself and then take the next step. You ideas may seem like gold on paper, but you need to put the plans in to action in order to make some profit from this business. When it comes to property investments, there are many success stories and many people have become wealthy using the basic principles listed above, but at the end of the day, you can't make any money at all until you actually get stuck in and get started!

Patrice SARDA