It is often thought that property investors are people who are in the high income earning bracket. This would seem logical, but in actual fact over 70% of property investors are on incomes between $35,000pa and $40,000pa.
This is quite staggering isn’t it?
Not only have that, over 90% of all millionaires become so through investment in real estate.
“It’s not how much you earn it is what you do with it that counts”.
Investing in property can be beneficial at almost any age. As you get older, if you intend to continue to working and keep building your assets then there is no particular reason why you should not invest either. Over a 10 year period, history has shown that profitable amounts of money can be made and in today’s property climate, with the lower property prices, there seems to be no reason why that should not continue, give or take a year or two.
Time is of the essence. There is a chance under this environment that you could hold a property for 5 years and make a substantial profit, but that possibility is in the hands of the God’s at the moment. No-one knows for sure.
One thing could probably be taken for granted is the fact that there will be no quick turnaround in the property market and to make a substantial profit (not taking into consideration refurbishing) a property would need to be owned for more than 3 years.
Why you need to hold the property for a reasonable increase in property value is because you have to take into account:
• Property purchase expenses – legal’s etc
• Commission on sale
• Exit fees on a mortgage
• Plus other possible selling expenses of advertising, legal’s, etc
It means that a property needs to gain at least 10% preferably 20%, before it is worthwhile selling if the purpose of the sale is to make a profit.
Should the market be slow or declining the period to hold a property will be longer, but if the property market is in a boom time then it is quite possible that the profit you desire could be made in a year or less.
These are all factors to consider when entering the
property market as an investor, now the question is ‘Would this suit you?’.
I experienced buying my first property when the market was falling in the UK in the last recession and even though I owed more than the property was worth as property prices kept falling, after a couple of years of holding the property I made a very nice profit. If I find myself thinking oops there goes the equity I know from previous experience that it will always bounce back you have to be prepared to wait.
