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Fundamentals of Property Investing |
Written by Melanie C
Tuesday, 20 May 2008
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The three fundamental rules of investing in property are to maximise your yield, maximise your capital gain and manage your risk. To maximise yield, find out your return as a percentage. If your yield is your rental income, then find out what the annual percentage would be on your purchase price. If it is something like 5% you may be better off putting your money in a savings account offering 8% interest. To maximise your capital gains, you must sell your property for a greater amount than you bought it. To do this you need to take advantage of the property cycle, while also watching economic trends and interest rates. You also have to take into account what it costs you to buy and sell, not just the purchase price alone. But even when the property market is hot, there are bargains to be found when people need to sell quickly for some reason. Managing your risk is the third basic principle. To stick with low-risk all the time means your gain is also low. If the returns are high, then the risk is usually high too. What is needed is a delicate balance between the two, to get as high a return as possible without too much risk. Risks can include falling prices, rising interest and lack of tenants. Ways to mitigate risk includes insurance, sticking with a fixed rate loan and researching the market properly. Article Source: http://www.ArticleBlast.com |
About The Author:
Thinking of investing? Visit the Saville Australia website at http://www.savilleaustralia.com.au for more information on the company as well as residential property investment opportunities with a luxury home.
Thinking of investing? Visit the Saville Australia website at http://www.savilleaustralia.com.au for more information on the company as well as residential property investment opportunities with a luxury home.
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