Five tips for successful real estate investment

The worldwide real estate market is now within reach of investors wherever they live in the world. Much of this has been made possible by the Internet which allows you to literally research and physically look at property online as well as checking out the opinions and comments of other investors. Like the game of football, someone once said football was a simple game made difficult, real estate investment is in theory a simple process but in practice there are many different potential distractions.

We will now take a look at five simple tips for successful real estate investment which will allow you to build up a long term income and a long-term portfolio of property.

Don’t pay inflated prices

History is littered with investors who overpaid for assets and were forced to pay the price further down the line. The reality is that the worldwide real estate market is enormous and not overpaying for property is not necessarily the end of the world as there are many others to choose from. We’re not saying you should stick rigidly to your top price (there can be some degree of flexibility) but never chase markets simply to get a piece of the action.

Yield and potential asset value growth

It is very difficult to find the perfect property investment which offers both a high rental yield and strong potential asset value growth. In order to balance your portfolio it does make sense to look at high yield investments, with perhaps limited short-term price appreciation potential, as well as low yielding assets which have greater potential asset value growth. There is nothing wrong with mixing and matching these two particular investment criteria because the potential growth stocks will do well in buoyant markets while the high rental yield properties will offer a backbone in troubled times.

Always have an exit strategy

Is all good and well buying the best property at the lowest price but the reality is that you cannot spend a paper profit and you only make a profit when you sell an asset. The worldwide investment arena has seen many investors holding onto their assets for too long, missing out on a significant profit and very often holding on while the market turns and values fall. If you have a fair price in mind for a particular asset, taking in the current market conditions, and you are able to secure a fair price or above then what is wrong with taking a profit? As Lord Rothschild said, the reason I’m so rich is because I always sold too early. Think about that!

Listen to others but know your own mind

Even though there is great potential in following the crowds and getting out before markets turn down, the most successful real estate investors of all time do their own research and make up their own mind. Can you imagine if you bought a property because other investors were chasing prices higher, how would you know when to sell? If you do not fully understand the underlying reasons for buying a property, i.e. you cannot relate the price you paid to the fair value, you will find it difficult to dispose of your property at the right time.

Never mix business with pleasure

Business and friends and business and family very rarely mix because from day one we are all likely to have different strategies and our lives can change dramatically in a short space of time. We have all seen the headlines of friends and families falling out over property assets with arguments about as and when to sell real estate assets. If you are investing on your own behalf, making your own decisions, then you will live and die by these decisions. However, the big difference is that if you get the decisions wrong then it is your fault and you have nobody to blame. The buck stops with you!