Property Investing in The 21st Century

Vacation Property Investing

If you’re thinking about investing in property in another country, that could be a very wise decision. Investing in a hot vacation property could be a really smart move with very favourable results.

Profit Margins in Overseas Properties

If you’re thinking about investing in a hot tourist area and you have great timing, you could get in for cheap but with a high ROI. Some areas are still really reasonably priced for buyers while being really profitable from a tourism perspective and many successful investors are finding themselves with a properties that make three or four times the mortgage payment in profits each and every month. This can enable you to pay the property off quickly. You might decide to flip it for a profit in the near future or keep it and have it pay for itself and pay you dividends on a monthly basis. There are a lot of property management firms around that will manage the day to day management of the property locally for you so it can become quite lucrative passive income for you.

There’s a second great reason for investment in property overseas and that’s self-indulgence! Who wouldn’t want a nice place to holiday on a regular basis? If the vacation property is doing really well and is in a hot spot you can book it for yourself and your family for a week or two a year and get use out of it yourself!

Before investing in overseas property, especially as a vacation rental you’ll want to learn about:

-how the local economy is doing

-how healthy the tourism for that area is

-how much the going rate for rentals is

-what resources are available locally for you

-what do the local laws entail regarding overseas investors in terms of taxes, etc?

At times you can buy a great property that doesn’t even need much renovating to make it ready to become an income generating machine. Do your due diligence before taking the plunge! The good news is that there are a lot of resources that can help you make wise financial decisions that could be extremely lucrative for you.

Repossessed Real Estate

Property foreclosures are becoming more prevalent in Australia and New Zealand right now, due to a multitude of reasons. The current economic crisis that appears to have gripped the world right now adds to the amount of houses that have been repossessed.

Although having a property foreclosed on you is not a great thing to happen, it is a great thing for a property investor to take advantage of. I say take advantage, as this is not a time to exploit others misfortune.

With the average housing price in Australia appears to be sliding just a little bit further South, and people are unable to service their loans due to reasons such as redundancy and pay cuts, there will be more and more foreclosed properties hitting the market in the future. This presents a time, where you can cautiously add to your own property portfolio.

Seeking out homes that have been foreclosed is a little easier these days, due to the increasing numbers that are appearing. Often the bank or lending institution that has taken repossession, will sell the property so they can just recover costs on the outstanding loan. This effectively means, that you can purchase such an investment at a very good discount.

It is a good idea to have your solicitor run their eyes over any contracts before you make any offers though, as there can be other complications, just as there can be with any other property deal. Researching property foreclosures should be like any investment decision you make, and that means not blindly running in looking for a quick profit. Due dilligence, and the right team around you will help you make your profit.

Creating Wealth With Your Home

In our last post, we looked at how you could release equity in your home or Investment Property, and put that equity to good use, especially in regards to purchasing more investment real estate. Today, we will look at how much equity you might want to use to build your portfolio. This advice is just my own personal opinion, and when you go to use your own equity, then please consult your own financial adviser.

The last ten years or even longer, saw great surges in the average property price in Australia and New Zealand. While it has slowed down for now, the average growth of around 8% still applies. You might not get it this year or even next, yet it will all even out in the long term, and that is what we want. In saying this, it is important not to over extend your equity, or you may find yourself in the position of negative equity.

You must only use enough of your line of credit as to get in to the deal, and that means use as little as you possibly can. If you only have a couple of properties, this usually poses no issue and you can purchase another property with a 10% deposit. If you have quite a real estate portfolio though, you will probable be forced to pay a 20% deposit to secure more property.

When you start to build a investment property portfolio, it pays to use a service that help you find the best deal, such as a Mortgage Broker who specializes in multiple properties. These Brokers are usually free to use, as they will get their fee from the lending institution instead for bringing them new business.

At the end of the day, you have to be able to service the debt, so you must do your calculations as thorough as you can from the moment you begin to look at a new deal. Do not leverage yourself more than you can afford, and you should do just nicely.

Using your home equity is a fantastic way in which to create wealth, and it needs to be given the respect that is deserves. Use your line of credit wisely, and before long you will have amassed several investment properties, and from the there the sky is the limit.