Arnold
CibbuanoProperty Investment Strategies Part 4
September 8th 2006 00:37
This is the final part in my coverage of property investment strategies.
At the outset, the 3 main things you must ask yourself are –
1) How much risk are you willing to take?
This will help you determine how much money you are willing to sacrifice and the level of debit you are comfortable with absorbing. Risk factors will also determine the type of property you are looking to buy and the area. Banking on a high risk property will generally fetch greater returns than a low risk option. However, the higher the risk the more of a sacrifice you may be forced to make in terms of timing the market for selling, the amount of finances required to borrow and capital reinvestment.
2) What is the time scale your interested in?
Properties tend to appreciate at a slow but steady rate. Some areas will experience periodic booms and busts, but for anyone interested in purchasing for the long term, the short market cycles and fluctuations become insignificant. No matter what the current market climate, it is unlikely to have too much of an effect on the value of your property over a very long investment period. For those with a long term investment goal, there really isn’t any wrong time to buy property and timing the market isn’t so important. When it comes to short term investment periods, timing the market and reading property cycles becomes very important. For shorter term investing it is important to buy in areas and at times when there is a buyers market (that is property prices are undervalued due to a shortage of buying demand) and to sell when there is a sellers market (that is property prices are inflated due to an increased demand from purchasers). If you are working to a short time scale, the type of property that you buy and the area you buy into will be greatly influenced by the current property climate.
3) How much time will you be able to dedicate to your portfolio?
For those with little time to spare on the management of their investment having a simple straight forward portfolio is a must.
At the outset, the 3 main things you must ask yourself are –
1) How much risk are you willing to take?
This will help you determine how much money you are willing to sacrifice and the level of debit you are comfortable with absorbing. Risk factors will also determine the type of property you are looking to buy and the area. Banking on a high risk property will generally fetch greater returns than a low risk option. However, the higher the risk the more of a sacrifice you may be forced to make in terms of timing the market for selling, the amount of finances required to borrow and capital reinvestment.
2) What is the time scale your interested in?
Properties tend to appreciate at a slow but steady rate. Some areas will experience periodic booms and busts, but for anyone interested in purchasing for the long term, the short market cycles and fluctuations become insignificant. No matter what the current market climate, it is unlikely to have too much of an effect on the value of your property over a very long investment period. For those with a long term investment goal, there really isn’t any wrong time to buy property and timing the market isn’t so important. When it comes to short term investment periods, timing the market and reading property cycles becomes very important. For shorter term investing it is important to buy in areas and at times when there is a buyers market (that is property prices are undervalued due to a shortage of buying demand) and to sell when there is a sellers market (that is property prices are inflated due to an increased demand from purchasers). If you are working to a short time scale, the type of property that you buy and the area you buy into will be greatly influenced by the current property climate.
3) How much time will you be able to dedicate to your portfolio?
For those with little time to spare on the management of their investment having a simple straight forward portfolio is a must.
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