Investors have long been eager participants of the real estate space. The investments made in real estate yield the potential for greatly amplified profits so much so that investors give little to no consideration to the risk side of the coin. Nevertheless, risk is omnipresent when it comes to investing, and being careless of your decisions can lock up your capital with little hope of recouping it in the near future. Here’s 5 guidelines you can use as a template for making smart and profitable real estate investments in Singapore as well as in other key locations.
Have An Exit Strategy
Unarguably the most important guideline for investing in real estate is to know your exit strategy. There have been several exit strategies used by seasoned investors over the past few decades, but trying to incorporate these strategies as a novice can lead to more harm than good. Instead, start out with a fundamental approach, such as buying and holding serviced apartments in Singapore as a landlord or flipping houses to make a profit.
Have a Business Plan
Your business plan is the foundation of your investing endeavors. Without it, everything else you work to achieve can crumble to the ground at any second. Headers to include in your business plan should be long-term and short-term goals, main strategy and contingency plan, time frame, and the market demographic you want to focus on. If you plan on going big and building an investment firm focusing on real estate, you will also need to build the right team and procure the best systems for task automation.
Get the Right Education
Just like how you’d approach other worldly pursuits, such as trying to be a professional golfer or stockbroker, investing in real estate demands the same if not a higher degree of self-discipline and mastery. Keep in mind that real estate investing is not a “get rich quick” scheme. If you cannot pour your time and attention to learning it properly, find a different route. A good way to get informal education in the subject matter is by watching Singapore property news regularly. Observe daily fluctuations in real estate prices and new regulations enforced by housing authorities.
Learn How To Wield Leverage
Perhaps a huge appeal to investing in real estate is the variety of ways you can profit by leveraging cash, regardless if it’s your own money or someone else’s. Be cautious, however, since leverage can act as a double-edged sword. Leverage can amplify losses as much as it can amplify profits. Only use leverage once you’ve gotten a solid grasp of how the real estate space works.
Find the Right Property
Create a criteria or template that you can use to screen viable property options. Common practical factors include the town or neighborhood, property and lot size, property conditions, cap rate, cash flow, and the projected appreciation rate and amount. Aside from these factors, you should also look at your goals when viewing properties. For example, if you want a long-term source of passive income and you don’t mind burning up a huge chunk of your capital into a single property or complex, condominium or apartment rentals are a great match for your investment goals.