With extremely high returns on investment, it’s no wonder why more and more people today are hopping on the bandwagon, expecting to make a fortune from buying and renting property.
Just look around you and you’ll probably find a few friends, colleagues or relatives investing in property. That’s how big the market is today.
Before you plonk your hard-earned money on a piece of real estate, bear in mind that property investment is not a decision to be made on impulse – especially if everybody’s doing it.
There is a substantial amount of information that you should research and a sensible strategy to adopt if you ever want to be successful.
According to Robert Kiyosaki’s Rich Dad Real Estate Advisor, Ken McElroy, there are 5 important things you must know before you decide upon your investment.
First of all, you must know the type of property you want to invest in:
The choices can range from residential to private housings, commercial property, or even land that is waiting to be developed. You need to know the type of property you’re interested in before you can even think about financing, and other areas in the investment process.
The second thing you must know is the geographic area of your property:
According to Ken, this is called “Level 1 Research”. This level determines whether you want to invest in property within your state, city, or somewhere else in your country. Level II and III Research narrows that decision down to even greater detail, concentrating on the particular housing estate in which you want the property to be located.
The third thing you must know is your financing strategy:
How are you going to pay for your investment property? Small properties are usually paid for completely, but bigger properties typically require investors or a major loan from a bank. There are banks that will even loan you the money for smaller properties as long as the real estate has a proven record of profitability.
The fourth thing that you must have is a team:
Do you have a team of professionals who can help you manage the work involved in your investment? Typically, your team should include an accountant, mortgage broker, lawyer and a property manager. Later, you might also want to welcome on board architects, engineers, surveyors and tax consultants.
The final thing you must consider are the necessary costs for repairs even before the property can begin to earn a profit:
The value of your property is affected by the state of its interior and you will have to consider arranging for minor or major repairs before you can lease it out and get a return on your investment.
With these 5 important things in mind, you can then build a solid foundation for your investment strategy and avoid the risks that beginner investors commonly make.
This article is based on the teachings of Rich Dad Real Estate Advisor, Ken McElroy. Ken will be speaking at this year’s National Achievers Congress in Singapore and Malaysia. For more information about the event, visit www.nationalachieverscongress.com