It's a well known fact that you only make (or loose) money on a property when it comes to selling it. However, a better strategy is to look at making money when you BUY...
That is probably the best rule to apply when you are investing in property, specifically in today's markets when the hype is all about a potential downturn.
Any of us can buy items that lose money for us—this is the easiest thing in the world. What is more difficult is finding an investment that will give you a continual return on investment (ROI). To do this, you need to understand what you are investing in, why you are investing in it, what the opportunities are for the investment, and what are the threats.
Individuals often look at the stock market as the world of investing, and if we look into the average perception of investing here, then we should hopefully clarify how we should begin investing in property.
People would not simply pick a stock out of a hat, would they? If investing alone, they would look at the market segments, analyse the industry and then draw down a list of potential investments before fine tuning it down to one or two stocks. If investing with an investment house, they would hope that the financial advisor did this work and then provided a number of smart investment choices. Then, they would make their choice that best fit their goals and invest.
So, should the process be any different when choosing an investment property? Clearly not, but the problem with property investing is that everybody has an opinion on it. And, because most families have bought at least one house in their lifetime, they feel like they are investors, too.
However, most novice investors, amateurs and gamblers fail to adhere to the rule above. They buy what they believe is an investment with little understanding of the market that they have just bought into, with no knowledge of an exit strategy for this so-called investment and with little understanding of if and how it could be profitable.
Investing is a business. It is no different to any other profession or trade that the population embarks upon.