Should You Be Investing In Properties

Investing in property has become more popular in the recent years with more people buying properties to rent out as an investment strategy. Are you currently reading lots of property news and wondering if you should be investing in properties as well? With so many investment options available out there, it can get a bit confusing when it comes to choosing the right investment journey. Make sure you engage a certified real estate agent from Lembaga Penilai, Pentaksir Dan Ejen Harta Tanah (LPPEH) if you are engaging real estate agent to help you with listing and liaising with potential renters. This article will guide you through the reasons in getting into property investments.

Property investment is a tangible investment as it is something that you can see, feel and own as compared to stocks investment, whereas stock investment is considered a high risk investment strategy, as it depends mainly on the economic sentiment along with the company performance. There are some reasons on why you should consider venturing into property investment :

1. Predictable return

Properties give a more predictable return as compared to stocks and shares. 

2. Inflation hedge

Real estate investments are terrific inflation hedge in protecting against a loss in purchasing power, as rental rates increase as much as the inflation rate.

3. Great place for capitals

You have total control of your investment and property investment offers you with options in terms of growing the value of the property. That being said, you can control and decide when to sell your property for capitals whereas stocks and bonds investment can be tricky, as you have no control over them. 

4. Great base for financing more investment opportunities

Property investment allows you to have a strong base to finance other investments that you are interested in. 

You will also need to look out for several factors before deciding to jump into the property investment bandwagon :

1. Location

You will need to determine the target market and do your research on the demand of your property in the chosen location. The quality of the location will greatly influence the types of tenants you attract. A property located near education institutions will definitely attract more potential tenants, as there will be more students in the proximity. Therefore, you will need to also check for amenities nearby, such as shopping malls, parks and public transport that will attract more renters. 

2. Type and size of property

The type and size of property will attract different tenants. For example, students will only need a room where they are able to sleep and study whereas a family will definitely need a bigger space for their children and privacy. 

3. Rental returns

You will also need to do your research on the average rental values of properties that are similar to yours in the same area, in order to have a rough estimation on how much your property can fetch. As you need to pay for the mortgage payment, taxes and miscellaneous fees, you will need to charge a rental fee that will be enough to pay for your costs.

4. Cash flow

In addition, you will also have to evaluate your property’s potential in generating income and how long it takes to achieve a positive cash flow. 

Before you start venturing into property investment, there are several questions that you will need to ask yourself :

1. Your targeted rate of return

You will need to be clear on how much you plan to get from your investment.

2. Down payment

You will also need to ask yourself how much money would you need to prepare for the down payment.

3. Monthly installment

Other than the down payment, you will also need to know the monthly installment that you will need to pay.

4. Aim

Do note that property investment takes time. Be realistic with your aim when it comes to property investment. Ask yourself how much do you want to make through property investment and you will have to be patient with investment property. 

5. Emergency plan

Not forgetting an emergency plan, you will need to ask yourself if you are able to manage your finances if there are losses incurred. Cash flow is the money that you make from your rental properties every month. That being said, your cash flow will increase over time as the rental yield goes up along with inflation while the mortgage payments remain the same. However, there is also a risk involves when your property is vacant and you do not have any cash flow.

In conclusion, property investment is not easy and is definitely not a scheme for you to get rich quick, but it can be promising and will allow you to retire early. Property investment takes time and effort to make it work and the sooner you start, the easier it gets. Nonetheless, property investment is considered a safe investment option as compared to buying shares or bonds. Make sure you educate yourself with the process and the best way to get the most out of your investment property with great returns

** long term investment...