investment property: What You’re Getting Yourself into?

As the prizes of goods swing and the stock market fluctuates, more and more people are finding investment property as a good business venture. This means that more and more people are buying land not to occupy it but for the purpose of securing capital gains or renting it out to others.

Why go this route? As any book will tell you, land is an asset that does not depreciate. And as foreign markets are putting up more businesses in Asia, it is not a wonder that land has become a very precious commodity. In Singapore alone, appreciation rose at 31% last year. However, reports are showing that this year, growth might be hindered by the downhill roll of the global market and by possible government interventions.

As more cities are becoming urbanized and as more urbanized cities are developing and getting more populated, several locations are being converted into single family homes, lofts, duplexes, apartments complexes, condominiums, townhouses and even vacation houses for the labor forces of these growing cities. These house rentals are not getting any cheaper either.

Do not limit yourself to residential areas though, as more residential areas are being overshadowed by commercial buildings.

Now, if you’re willing to take the risk. Here are few things to consider in investment property:

1. Make sure that the money you’re allotting for this project is in order. This is because investing on a property does not only mean paying for the land but also for repairs, maintenance, improvements and even surviving in between tenants.

2. Get your numbers straight. There are a lot of factors to consider in ensuring that you are making a sound investment. Your annual yield can help you analyze if the rent you collect in a year can make up for expenses. property value is always a good thing to know just in case you’re thinking of selling the said property. Your monthly cash flow could be an important gauge in this decision.

3. If you lack the experience, it might be a good idea to either hire a property manager who can help you take care of the details or pooling resources with known or trustworthy investment companies.

4. Even with help, do your own research. It’s always a good idea to build a network of contacts (Go to BullytheBear blog). They can give you a better thought on the value of the property in a particular area. The right friends (BullytheBear's superfriends) can alert you to coming foreclosures and sales. These people might even be able to help you acquire that elusive piece of fine real estate.

5. And just like the TV series, keep in mind that a sound investment relies mostly on “location, location, location”. Prime investment property, though, does not come cheap. It will take a sharp eye, patience and a lot of bargaining to find a good buy at a good price.