Whenever the subject of long term investing comes into the picture, we can never fall short of hearing all sorts of stories from real estate investors. Some wished they had bought a certain property 30 or 40 years ago, while others regret their decision of not buying a few of the hot properties. In short, a handful felt their decisions contributed to them missing out on making a lot of money.
Long-term investing has been a proven strategy for investors build wealth, but applying the wrong strategy can easily prevent you from achieving any form of success. Here we speak of three deadly myths often associated with long term investing.
All properties bring in money
Bring in the property consultants or strategists and they too would have their own versions when it comes to long term investing. In fact, it is quite common to receive advice saying that it does not matter which property you invest in, because eventually, the property will still make money. All you need to do is be patient and wait for the property to start generating cash flow.
True enough, it is widespread knowledge that we can expect to make more money in the long term as compared to the short term. For real estate, short term investments tend to be riskier if the market collapse, or when there is far too many developments going on in a certain area.
But the truth can be further than that. Not all properties sold in the market are capable of bringing in the money. Some consultants or strategists have a certain interest or contract with certain developers, and as a result, they promise the stars and the moon in order to sell their properties. What they promise, may not necessarily be true. Make sure you do your due diligence on potential properties before making any investments.
Long term investing leads to big money
On most occasions, it does take time for the value of a certain real estate to appreciate or for rents to go up. In this regard, long term is the best approach and you need to leave it to time to do its thing.
However, if your property will only increase in value by 20% in 10 years while your neighbour’s property increases in value by 60% in the first 7 years, would you still be satisfied with your investment? There is a huge difference and this is avoidable provided you got the right advice and applied the right strategies.
As a real estate investor, you need to understand that a good long term investment portfolio is closely linked with short to medium term profits. If your property has the potential to make good and steady growth in equity after a few years, you are most likely to reap the rewards of your investment earlier and in better figures. You may not realise it but the difference in percentage can account to thousands or millions of dollars.
Take a look on our webinar content at www.investinproperites.com.au to see the figures speak for itself.
The risks are significantly lower
Another deadly myth is the unrealistic expectation that risks are expected to be lower for long term investments. The truth is, as with any form of investment, risks are all too real and you need to have a clear understanding of what are the risks involved.
Owing to the volatile nature of the real estate market industry, you need to assess the risks associated with the desired property, suburb and state before you make your purchase. By measuring the risks and opportunities, you can identify properties that are likely to have a steady growth. This in return will enable you to achieve higher success in reaping profits in the short and medium term.
By all means, do not be influenced by the charms of property consultants and strategists who have nothing to offer besides showing off their expensive cars and watches. Some may even lead you on with your dream house, however, you must never let your emotions get the best of you. A healthy sense of skepticism is always good for an investor and it is highly recommended for you to ask them questions, rather than absorbing everything that they have to say. The key is to gather as much information as possible to ensure the property would eventually be a good investment.
At the end of the day, long term investing is still a good strategy for real estate investments. And if you want to be a successful long term investor, it is important to select the right properties to invest in. What is more important is you need to avoid falling for the three deadly myths of long term investing. Be smart in your investments.