Property Investing Advice for Beginners

Posted on August 20th, 2009 by lol in General Business Advice, Investing, Ways To Make Money

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The majority of my income is generated from property related interests. These vary from a personal property portfolio, property management service for other landlords, property sales (flipping), overseas purchases/rentals, hotels and also land projects. All of these interests have assisted me to leave The Rat Race.

In the last ten years I have refurbished in excess of fifty properties and it’s been one of the biggest learning curves of my life! I’ve bought many a bad property and have lost thousands; at the opposite end of the scale however this business interest has brought me most of my success.

My personal opinion on generating an income on property is this; unless you are a very good sales person and an expert in networking, you will find it extremely difficult to flip (buy and the sell immediately) properties. Unless you can act like a broker and sell them promptly, you will not make a quick return! And in this case it is very much a long term business interest.

I have kept most of the properties I have purchased; part of my long term goal is to rent them out and hopefully sell for a profit later in life and when the market has corrected itself. In the meantime the difference between the mortgage and the rent provides me a passive income. The management is undertaken in-house and the whole process is automated.

If you have decided the property industry is for you, I urge you first to consider that buying a property is committing yourself long-term to a project. You need to think worse case scenario, always over budget and make sure you cover all bases. If you are buying it with another person ask yourself if you really need to. I associate buying a property with someone the same as getting married to them. You are legally attached and to part company if the relationship goes sourer will drastically set you back.

Never over expose yourself and don’t think for one moment it will be easy money. Many people watch the endless amounts of property related television shows and think it is a fast route to success and massive wealth. This is not the case; buying properties is fraught with many financial dangers and in the early stages of learning it can be very stressful.

I am not trying to put you off; I merely wish to get you thinking about what COULD go wrong. I have overexposed myself on two occasions and nearly lost my empire! The recent collapse of the economy has taken some very large developers and property investors, no one is safe; it only takes one bad deal to potentially loose everything.

It’s not all Doom and Gloom

If you buy the right property, in the right area, in the right street and at the right price; you are sure to make money. (Download my free property inspection form from this post.) Always do your research and never ever pay more that 70% of the asking price. The 30% difference is your buffer zone. In this market some developers are offering around 50% of the asking price; and are successful with their offer! If the seller won’t negotiate walk away. Its important to keep emotions out of the equation and don’t let your heart make any decisions, I have made this mistake and I’m still to this day paying the price!

Final Word

Every successful person has interests in property. If you feel you have the ability and passion to work with property; then go for it. Property provides me with an excellent passive income stream. If you buy right it could do the same for you.

As I specialise in this area I will post further informative article on this subject to assist your cause and hopefully you will benefit from my experiences and costly mistakes, I am also on hand to answer any questions by way of comments posted below.