10 Tips for Successful Real Estate Property Investment

In spite of the fact that real estate prices appear to have reached a temporary plateau in many nations around the world, it is still possible to earn a profit from property investments.

Even amid a real estate market downturn, stagnation, or depression, local and international profits can be made. This article outlines the top 10 recommendations that real estate investors use to assure the success of their property portfolio building approach.

1) Conduct research on the curve – the existence of a property market cycle is not a myth; it is a proven fact based on a price-income link. Check the latest historical pricing data for homes in the region of the country you’re considering purchasing in and attempt to establish the current market sentiment towards prices. Are prices increasing, decreasing, or have they reached a maximum? You must be aware of the position of the property market cycle curve in your selected investing location.

2) Get ahead of the curve – as a general rule, professional real estate investors attempt to purchase properties ahead of the curve. If a market is on the rise, businesses will attempt to target up-and-coming places, areas close to spots that have reached their peak, and areas close to sites undergoing renovation or investment. These regions will likely become the “next big thing,” and those that invest before to the trend’s emergence stand to gain the most. Since a market is stalling or dropping, many successful investors focus on sectors that experienced the highest levels of growth, yields, and profits relatively early in the previous cycle, as these sectors will likely be the first to become profitable as the cycle begins to move towards the positive.

3) Know your market – for whom are you purchasing real estate? Are you buying to let to young executives, purchasing to renovate and resale to the family market, or buying to let for short-term rentals to vacationers? Consider your market before making a purchase. Determine what they are looking for in a home and make sure you offer it.

4) Look further afield – there are emerging real estate property markets around the world where countries’ economies are thriving, where a growing tourism sector is driving up demand, or where constitutional legislation has changed or is about to change to permit foreign freehold ownership of property, for example. Look beyond your immediate neighborhood for your next real estate investment, and diversify your portfolio for optimal performance.

5) Acquire price – Establish a budget that will allow you to purchase the property you’re interested in and benefit from it either through capital gains or rental yield.

6) Entry costs – the research fees, levies, and other expenses you will face while purchasing a property – vary from country to country and occasionally even by state. In Turkey, for instance, you must add an additional 5% to the purchase price to account for all expenses; in Spain, you must account for an average of 10%; and in Germany, fees and taxes can exceed 20%. To avoid unpleasant surprises and ensure that your investment will be lucrative, you should be aware of the costs you will incur and include them in your budget.

7) Capital growth potential – what criteria indicate the investment’s prospective profitability? Which economic or social indicators predict that real estate prices will rise in an emerging market overseas? Are there any indications that the demand for rental housing will remain strong, increase, or drop if you are investing in rental property? Consider what you hope to accomplish with your investment, and then conduct research to see whether your goals are reasonable.

8) Exit expenses – if you would pay significant capital gains tax liabilities if you sell your investment property for a profit, will this render the venture unprofitable? In Spain, a foreign buyer is subject to a maximum capital gains tax of 35%, whereas in Turkey, property sales are exempt from capital gains tax if the underlying property has been owned for at least four years.

9) Profit margins – what levels of capital growth or rental income can you really expect from your property investment? Work backwards from these figures to your initial budget to determine your possible profit margins. You must always keep the larger picture in mind to ensure that your real estate investment has a high profit potential.

10) View real estate investment as a long-term investment, unless you’re purchasing a property off-plan and intended to flip it for a profit before completion. Real estate is a slow-liquidating asset, and cash entangled in property is difficult to release. Take a long-term view of your real estate portfolio and give your assets time to appreciate before selling them for a profit.