Real Estate Matters | All you wanted to know about property investment – Place, potential, people (part 1 of 8)

Juliet Risdon

Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

Many people consider real estate and other investments too risky.
Some people decide to let their money stay idle in the bank with low interest rates. Others buy property and grow their wealth significantly with real estate investment. Which type of person are you now, and which type of person would you like to be?
What gives some people an almost effortless ability to make money whilst others seem lose their shirt on every ‘investment’?
If you have been working for some time, hopefully you will have accumulated some form of savings. We want to put the money to work, but we may be worried about the investment choice. Why not put the money in the bank? The answer is simple; Compound interest.
If you receive a 2% interest rate, after 10 years your original capital will have grown just over 21%. Let’s look at the difference in percentage growth and what MOP10,000  will become if we can achieve modest returns. After 10 years growth;
At 2% interest per year, $10,000 has become $12,190
At 5% interest per year, $10,000 has become $16,289
At 10% interest per year, $10,000 has become a whopping $25,937, and thanks to the beauty of compound interest, after 20 years it is an incredible $67,274!
There are many ways for your money to work hard for you, and one approach that has proved successful for many of the world’s financially independent and wealthy people is through real estate investment.

6 Reasons why wealthy people own property:
1) A well chosen property will appreciate in value over a shorter period of time, giving capital growth and profit when sold.
2) Real estate plays a critical role in advancing towards financial freedom. For example, creating an income through rent. Rental income can also be reinvested in to the property bringing debt and monthly mortgage payments down, and cash or ‘equity’ in the property up.
3) Real estate has less volatility when compared to stocks and shares, and hence it usually carries a much lower risk.
4) Simple methodologies are involved, i.e: Finding the right property, funding that property. Many people go through this process when they are buying their own home, but fail to do the same thing for investment.
5) Unlike companies and the stock market, people will always need a place to live and a roof over their heads. Its one of the very basic human needs. Whilst we don’t know how a company is going to perform over the next 2, 3 or 5 years, there will always be a demand for property.
6) Banks are happy to lend money on real estate.
You probably knew everything that was on that list above and you may even have some points to add to it. But why do some people profit from this type of knowledge and understanding whilst others do not? The answer; Action.
Taking action is one of the most difficult challenges we face. Why? because the purchase of an investment property is rarely ‘urgent’, and today’s urgent agenda becomes far more important.

Finding the right property.
Given the amount of properties available in the market, we want to choose the right property, one that will rise in price and can be easily rented out, then resold when the time is right.
Hence to choose the right property, we consider the following critical factors.
Real estate factors (1) place – Location, location, location!
Location is also the key factor in looking out for a suitable property. Ideally, it should be near common amenities and facilities such as schools, markets, bus (and train) interchanges, shopping centres, and parks. If you can find a location with all these plus factors, you are in luck, because such places tend to grow in value fast, and hence proved profitable for you in a short time.

Real estate factors (2) people – Who are your target rental market? Young professional, family, couples, top executives? Make sure that you source the style of property and furnish it appropriately for your market’s needs.
For example a small high quality apartment might suit a young professional but not a family who would appreciate more space.
Nonetheless, it is all up to personal decisions. You may desire a place which is quieter and away from the urban chaos, but that could compromise on the accessibility and conveniences which could in turn have an impact on your future property value.

Real estate factors (3) potential – Size and Amenities:
The common phrase “Size does matter” is especially true in real estate, and of course the living space is the first impression when a potential tenant or buyer steps into a property.
Besides considering space for the living room and bedrooms, extra spaces for storage, car park spaces, access to a clubhouse with swimming pools or gyms are often a plus point.

NEXT WEEK – Part 2 of All you wanted to know about property investment: Character, cash & condition.

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