Long Term Investments Hedge Your Property Portfolio Better

Property is not a liquid asset and it may not pay to treat it as one. Peter Sarmas for the Street News states that low interest rates may have made quick-buck seekers more interested in the property market but the traditional technique of investing long-term may still be the brighter strategy for real estate.

Real estate flipping is on overrated concept

A few investors, buoyed by low interest rates, are going crazy on buying those properties which are “renovator’s delights”. They are actually the ones who go for real estate flipping-buying below market value-undertaking quick renovations-selling at a higher price.

You already know their modus operandi. They back on a short-term hike in property prices and look to time their sale perfectly. This kind of strategy is error-prone, asserts Sarmas.

Property market passes through cycles

The property curve is not like the share market. Here, capital growth takes place over time. A location passes through various phases; quick rise, consolidated rise, correction, sustained fall, sharp fall, stagnancy, resurgence (initiating with modest rise).

Thus, property investors should always seek long term investments, holding their portfolio long enough to successfully pass through property cycles.

Rent out to offset your mortgage costs

Buy your property for long-term and keep afloat through tenancy. This is what wise men have been saying since ages. Essentially, you should first research on the suburb you wish to buy in. It is ideal to check the rental yield first.

High rental yield would mean that you easily offset the mortgage liabilities associated with the property with the rent you command for it.

Demographics and location

Look for properties in areas where there is no dearth of public transport, common amenities and reputed schools. Such property locations which also offer good capital growth in the long run are the ones you should invest in, contests Sarmas.

Also, it would serve you well to seek areas which have higher concentration of students, young singles and newlyweds, among others. These are the ones who mostly look for rented homes.

You can read the original article here.

History of growth and comparable sales figure

Getting information about Comparable Sales Figure and history of capital growth from the right sources can be a smart start to your research in my opinion. Long term investments, as has been proved time and again, allow you to hedge your capital losses on a property against the capital gains made by others in different locations more effectively.

This brings to fore another beautiful principle- always choose diverse locations to build your portfolio.

Is location of paramount importance to you? If there is one prime quality you seek above everything else, which one is it ?