Investing in Real Estate

real-estateAt the Edify Group, we believe that one of the best vehicles for wealth creation is real estate. While we strongly recommend that your portfolio should be diverse; we feel that property investment is one of the must haves. Land is finite. This makes it always in demand. As the population of this world increases, then so will the demand for land. This creates a favourable investment equation that really is economics 101. When demand increases, then the price of that land will rise until it reaches a point where there are enough buyers to meet that demand. Simple. It goes the opposite way of course, if there is too much demand, then price will drop until buyers come back into the market to eat up the excess demand and prices will again level out.

The market is always in flux. There are bubbles, crashes and times where the market is consolidating. Having said that, our focus is not just on buying low and selling high, but in creating a passive income through smart real estate investment.

Investing In Real Estate Tips

We will go over a few things that are red flags before you buy. Some of these will mean that you should walk away and move on to your next option. Other times, a property may look bad, but perhaps all you need to do is clean it up a bit, remove rubbish and trash, perhaps fix a few rooms or modernize it and sell it. Furthermore, we have seen people do just this. They have removed the fridge, updated the kitchen with new plumbing and counters, redone the bathrooms and re-carpeted the bedrooms called the rubbish removal specialists and been able to flip the property for thousands of dollars profit.

benefits-of-real-estate-investment-in-AustraliaThis is just one tactic that you can do. There are several methods. As we say, our favourite is to generate passive income that stands the tests of market fluctuations. To do this you need to be educated in what kind of property is being sold at below market value. This is below what the banks value the property and not what the seller or the real estate agent values the property. You have to remember who the real estate agent works for. It is the seller and not the buyer. It is the seller that pays him or her a commision. Not the buyer. Having said this, a good agent is worth their weight in gold as you can partner with them for mutually beneficial gain. Just always remember who pays them.

It takes time to learn these skills and this is where we want to help you. We will have articles on tips and tricks. What to look for and where. Ways to negotiate with not just the seller but also the banks. Banks love to lend money for property and for some reason people think that they cannot negotiate with them. This is false. We will have articles about good debt verses bad debt and much much more. We at the Edify Group look forward to helping you have a more informed journey through the pitfalls in the Australian and New Zealand real estate investment world!

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5 common mistakes in real estate investing

Think-about-buying-a-house-in-SydneyInvesting in property involves purchase and selling of houses. Being able to research well and identify secure prime development sites is important when buying a home. Moreover, it is of great importance to identify cumulative prices of property identified before acquisition. In this article we major on common mistakes made when one wants to invest in real estate and especially purchasing a home. It is important to note that, buying a home is one of major purchases and crucial to make right decision.

5 Common Mistakes In Real Estate Investing

One of the mistakes made is buying a house with the intention of trying to flip the property.  This means that the buyer is not permanently staying in the acquired property and has plans of moving again. Such an individual makes an automatic assumption that one will sell or rent it when relocating. Such an assumption does not work well always. This is because, home buyers use bank mortgage funding which have monthly installment to be paid. In case of delayed sale or rent of property, then one is tasked to pay for the property. While in theory, this sounds great (and can be if done right), we often see people that have this plan but do not budget for the possibility of the property not selling quickly or if they want to rent it out, not having renters.  If you only have one investment property, then you are at the highest risk.  Owning more can mean that if one property is not rented then the others can cover for it.  Just make sure that you have budgeted for these possibilities when doing this.

The Second mistake made is stretching budget beyond estimated budget to get a home of choice. It is a scenario which mostly occurs when one realizes that a home that suits your need is more expensive compared to the initial budget. This has negative effects on one’s finances in the future. Considering one had a mortgage from a bank, it is wise to stay within the financial limits. Spending more exposes one to unfavorable effects (financially) of any change which may occur in future.

The third mistake is that home buyers fail to budget for added costs when investing in real estate. Things like mortgage insurance, stamp duties, land rates and loan application charges should be part of the budget. At times owning a home costs more than renting due to land rates and mortgage insurance. One should be prepared for extra budget when relocating to a new home. It is wise to budget for unexpected events and estimate their costs well.

The fourth mistake home buyers make is being influenced by the market more than their personal needs. Property market moves in cycles and sometimes interests are very low. At this point you are tempted to borrow more to buy a more expensive home just because the mortgage insurance is low. You will realize someone was not ready to own a home but low interest rates influence them to invest in property market. It is important to note that, such rates can rise in future and cause financial problems in a buyer’s life. Buyers should put into consideration personal needs and right timing when buying a home.

The fifth mistake is, neglect when signing contract. A buyer and seller are bound by sale contract. Failure to keenly read and understand everything in the contract can lead to disagreements in future. One should ensure that the contract has clauses that protect his/her rights. Property agents always say it can be changed in future; however, it is wise to make changes before signing it to avoid conflicts in future. Buyers are advised to understand the contract, add clauses that protect them and remove that do not protect their rights.

While this is a very small list of what not to do, it is very important to know all you can about the property you want to purchase.  Making sure you protect yourself with information is the best defense and the correct way to make an informed decision.  If you want to know more about this then feel free to visit the Australian Government Housing and Properties page for more information.

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