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3 Key Forces That Dictate The Success Of Property Investing
To an individual who has just ventured into property investing, the formula for success could be as simple as Buy Low Sell High.
But for those who have been doing it for years with success will know that it is just a little bit more complex than that.
Making money, profiting, or just success from property investing can be broken down to just 3 forces.
What You Buy?
How You Buy?
Who Is Helping You?
It cannot get more basic than that.
Everything comes down into one of these 3 forces just like everything about life comes down into the 3 areas of money, health and relationships.
What you buy?
Your buying criteria describes what types of property you want to buy.
Someone may prefer commercial properties, while another person may prefer residential properties.
What you buy contains the list of criteria that you follow when looking for potential targets. These are information that you cannot change.
Other than a personal preference, your list of criteria should be factors that you personally think will give you the highest returns with the lowest risks.
This acts as the first point of screening properties.
Only those that can meet your criteria will be able to go 1 level deeper in your decision making process.
It is very important to know what you are looking for and listing down the criteria you want.
Failure to do so will result in a loss of focus.
If you get into property investing without having a clear picture of the types of property you want to invest in, you should step back and take some time to define it.
Public housing, private properties, commercial properties and industrial properties, etc, all have different types and classifications.
Define and decide what it is that you are looking for.
This will save you time and be more focused on what needs to be done and the skills you need to invest in the type of properties you want.
And don’t forget that your budget will also determine the scope of your investment choices.
How you buy?
Buying real estate is not as straight forward as grocery shopping where you pick and go.
There are many details to sort out before all parties can agree for a transaction to go ahead. The most prominent term is the transaction price.
Every experienced investor knows that it is close to impossible to secure a grade A property at a grade B price. This is why they will agree on a fair price rather than a low price.
In fact, if you are really good at property investing and familiar with the ins and outs of it, you can very often get a good deal when you are paying a high purchase price.
You do this by getting sellers to concede favorable terms in exchange for the high price that you are willing to pay.
The terms of your property purchase are always negotiable. Do not blink whenever a seller says that the terms are non-negotiable. This is all part and parcel of negotiation.
The only reason why sellers say these things is because you have yet to show them that you have something that they are willing to compromise for.
A lot of times sellers know deep inside that their property is not worth the price they are seeking. Or that it is worth that much but the market is not willing to pay it. So they know that in order to make the sale, they would have to lower the price. Yet they still ask for a high price to see whether the buyer knows his stuff.
Favorable terms can even make a great investment out of a low grade property bought at market price.
On the extreme end of a good deal, it will mean that you fork out as little money as possible to acquire the property. And yield as much cash as possible over your investment time frame.
There are various creatives ways to finance property acquisitions.
If you are someone who is all about numbers, then it shouldn’t need any reminding that the biggest returns will come from deal with the lowest capital outlay.
Who is helping you?
There is absolutely no way you can go about buying property alone. You need the help of professionals and other property players to help you close every deal.
In the world of property investing, who you work with can make the biggest impact on your success and failure.
When an opportunity gets on the market, the first people to get wind of it are usually real estate agents. And being the first person who is informed of them requires you to know agents well and have a good relationship with agents.
These information are not just limited to agents. Lawyers, accountants, mortgage brokers, contractors, bankers, etc, can all be the bearer of good news when they know you are on the lookout for properties to buy.
And we also cannot leave out mentioning mentors.
Seasoned property investors have seen everything and will already have their networks build up. Leveraging on their expertise and networks can greatly shorten the period of your learning curve.
And often times, these seasoned investors know exactly what they are looking for and will discard opportunities simply because it is not the type of properties they want.
Being in the loop, you could be the first person in the know when a mentor passes an opportunity.
A lot new investor meet mentors in real estate investment groups. It is an area which you might want to explore whether you are a rookie or old-timer.
Start off by attending some of the free property investing seminars being advertised in the papers. Join a property investors network and get to know like-minded people.
However, do be wary of people organizing these “groups” with the sole intention of selling you property.
You might even find bigger opportunities when many investors pool up funds to make big buys.