THE THREE GOLDEN RULES
1. Do your planning conservatively
- Set achievable, appropriate and worthwhile goals, making the most of your resources without taking necessary risks.
- What funds do you have available or what assets do you have as security to provide capital to invest with?
- What is your cashflow position after all income, expenses and tax implications are taken into account?
- It is important to have a general idea of the time available for you to become financially independent so that you can plan your investment strategy accordingly.
2. Buy the right property
- Where to buy, what to buy, how to buy?
- The property must be subject to CONTINUING STRONG DEMAND of both tenancy and sale.
- As a property investor you should be looking for returns, security and flexibility.
- Returns - Come as capital growth and income and BOTH should be continuous and growing.
- Security - Is found in prime assets which keep their value,.
- Flexibility - In property is determined by the laws of demand vs supply. If you purchase prime property in the beginning it will maintain its prime status because of the high demand.
3. Give it time
Real estate is purchased to live in or as a money making investment. The latter class of buyers can be classified as traders, speculators or investors.
- Traders - Buy and develop or improve property with the hope of making a profitable resale in the near future.
- Speculators - Buy and sell in the short term and speculate they will make a short term albeit risky profit.
- Investors - Buy and hold and because they are in for the long haul, they do not get caught as some traders and speculators do, by sudden and unexpected financial downturns.
It is not necessary to sell a property to benefit from its increase in value. As your equity becomes greater it can be utilised as security to purchase another property. Wise investors have used this strategy for years to develop portfolios of prime property.
Unfortunately we find that some investors acting in ignorance, in haste, or trust in bad advice, have broken rules one and two. It is therefore most likely that if the first two are not observed, the third will be hard to follow.