Putting your hard-earned money into an investment can sometimes feel like a risky exercise, especially if you’re not really sure about market conditions, the short or long-term outlook. Every investment you make, whether it’s in the stock market, property or other assets, brings with it a certain level of risk and uncertainty. The key to building a successful and sustainable property portfolio is learning how to recognise and minimise those risks. In this article we look at some of the issues property investment experts suggest that first time investors consider when launching into the property market.
Doing Thorough Research
At some stage in our lives we’ve probably all made a purchase we regret – maybe it was a snap decision or a last minute item that you thought you needed. These types of spontaneous purchases are done without thought or research, but also carry little risk as they are normally of low value. When it comes to buying property as an investment, however, buying without having carried out thorough research and due diligence can have disastrous outcomes.
At a minimum, first time investors should be following the property market closely, conducting research into issues such as up and coming areas, city versus suburb returns and new and off the plan property versus existing dwellings. Research needs to be based on your chosen investment goals, and should ideally be focused on long-term strategic growth and returns.
Because of the sheer complexity and range of factors that need to be researched, many first time investors will seek the assistance of property investments specialists such as Ironfish. Such companies have dedicated research teams and on the ground staff who monitor all aspects of the property investment market and pass this inside information onto their clients.
Spread Your Risk Through Diversification
It’s natural when you’re first starting out in property to want to invest in areas that you know well – either in your local area or in your capital city. Buying a property investment in one city and putting your eggs in one basket can be a good beginning and provide good returns as long as the local market is in growth. As soon as that market turns, however, you are left with a falling market and few options.
One of the best ways to minimise your risk as a property investor is to consider a range of residential property investments in other capital cities, thereby helping you weather any local market downturns. When one city’s property returns are falling, another will be rising, meaning that you are not out of pocket or left without access to capital.
Choose Reputable Companies
Finally, it is all too easy for many first time investors to be dazzled by property spruikers who promise quick, short-term gains and astronomical returns. Especially when you’re entering into a market such as off the plan developments, you need to be assured that you’re dealing with only reputable property companies, builders, developers and management firms.
Doing due diligence on the companies that you intend to have dealings with can include looking at their current reputation in the market, their track record with developments and testimonials from past clients.