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Real Estate Investing Tip - Earn The Highest Return On Your Property Investment

We have one real estate investing tip for you today.

The property investment tip is simple and straight forward: Do not buy property based on sentiments alone.

For example, you hear many first time home buyers say something like, "I bought the property in that particular location to be close to my friend" or "I bought the property to be close to my village".

Those sentiments may be important to you but they won't send money into your bank account.

Remember . . . this web site, selfmaderetiree.com, is a retirement planning guide that focuses on helping employees build a cash flow system that will provide the income needed to enjoy a financially free retirement.

In view of that goal, our real estate investing tip for the day is that you should follow the money.

So, instead of investing in real estate based on sentiments, you should actually invest based on the expected return on investment of the property you're interested in buying.

If the expected return on investment is good . . . buy the property.

If the expected return on investment is too low . . . look elsewhere. No sentiments.


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Do Not Buy Property Purely Based On Current Circumstances

One real estate investment mistake common among first time home buyers is this: they often buy property purely based on current circumstances surrounding the property.

Why is that a risk?

Simple. It is a risk because a property is a lifetime asset that is passed from generation to generation. It is not a piece of electronics that is discarded when a more fanciful model hits the electronic market.

This means that when a real estate investor buys a property, he or she can hold the property for over 100years. And the property can remain a family asset long after the death of the family member who bought it.

Consequently, the second real estate investing tip for today is this: Do not buy property purely based on current circumstances.

When buying a property that is put up for sale, give some thought to what is likely to become the status of the property in, say, another 50 years.

For example, ask yourself the following questions:

1. Is the property too close to a major power line?

2. Will the property be too close to a major proposed railway line in the future?

3. Is the property too close to a gas or petrol pipeline?

4. Is the property on a two-lane tarred road that is likely to become a six-lane road in the near future?

5. Is the property on a major road that leads to several towns? Is there any rumour of government plans to make one of the distant towns an investment destination? If so, is the expected volume of traffic to that investment destination likely going to compel the government to expand the road into a 10-lane expressway?

6. How is the topology of the area? Is the street where the property is located likely to suffer from flooding when the area becomes highly developed and populated?

This Real Estate Investing Tip Is Major. Always Ask The Right Questions Before Investing!

The pre-purchase questions listed above is not exhaustive.

As you learn real estate investing, you will discover that there are even more questions you need to ask before completing that purchase.

For example:

  • What was the sale price of houses in that area some 5 years ago?
  • What was the rental prices in that same area some 5 years ago?
  • What is driving the prices up or down?
  • What are the potential public and private sector investments in that area in the near future?
  • What is likely to be the expected rate of return on your investment if you buy the property?
  • What will be the price of houses for sale in this area 10 years from today?
  • By what percentage are rental values in the area expected to rise?

Bottom line.

As an employee preparing for retirement, you should not invest in real estate just to impress your friends.

Your goal should be to secure a good deal when buying a property, whether you're buying your first house or your third. And a good deal is a property with potential for high return on your investment.

In addition, do not buy property purely based on current circumstances because if you do, you risk losing your real estate investment in the future when circumstances change.

There is no doubt about it . . . Real estate investing is a secure path to financial independence after retirement.

The more real estate assets you acquire while still in paid employment, the greater the cash flow into your bank account during your retirement life.

Consequently, we highly recommend that you take this real estate investing tip seriously.

Think return on investment (ROI) when buying property.

Think also about the long-term security of the property you wish to buy.

Related Article:

Real Estate Investing Secret



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