For a long time now, putting money into real estate has looked to be one of the surest ways to invest. Like any other investment however, the key to maximising your profit is understanding the highs and lows of the property cycle in order to know when it is best to buy or sell. News.com.au advises would-be investors to be aware of the external factors that determine where they are on the cycle, which can range from small local influences to ripple effects from global events.
When determining how to invest in real estate, it is best to take a bottom up approach. What this means is that it is best to consider small, local factors first, and then more general ones as you go along. Local idiosyncrasies such as whether a property is on the “right” or “wrong” side of the railroad tracks or if there are nearby schools for buyers with children, which can mean the difference between a profit or a loss. On a more macro scale, a strong Australian dollar can make Australian properties more expensive whereas a falling Australian dollar makes them more attractive for expats and foreign buyers looking for a bargain.
A recent downturn in the Australian housing market means that now is the right time for those looking to buy real estate. The prices of homes in Sydney have tumbled as much as 11% after hitting their peak in 2017. Other major cities such as London have followed suit, with luxury apartments in the city down by 19%. Even apartments in posh areas of New York have also seen their median prices slip to new lows in recent years. Although the New York property market has become one of the fastest growing in the world with Yoreevo reporting that an apartment in 1989 worth $1 million ($AUD 1.4 million) would now be worth $2 million ($AUD 2.4 million), it is still not immune to the recent real estate trends. The current median price of a NYC apartment is now below $1 million for the first time in three years. For those looking to buy prime real estate in international cities, now is the time to look.
But what do you do if you have already purchased a property?
Being a landlord and managing your own property is a popular option. It should be noted though that being a landlord is much more than simply waiting on payments every month Your Investment Property note that there are several key things people should consider before deciding to become a landlord. One being whether they have the right personality type to keep the “relationship with your tenant a business one.” Landlords will also have to ensure that they can carry the responsibilities of complying with local property tax laws, screening for the right tenants, ensuring their properties are in good condition and even having to forcibly evict tenants if needed - to name just a few. Even landlords with vacant properties have the responsibility of seeing that they are leased properly.
While there is a lot of money to be made in real estate, there is no denying that it comes with unwanted headaches as well. The good news is that there are many experts and resources available online to help you out. This includes the mortgage schedule calculator we have designed here on The Finance Guy, to assist those with mortgage issues. Real estate is open to all but its winners are determined by who carries out thorough planning, research, and budgeting.