Property investment is indeed considered very promising, of the many business investments. The definition of property investment is a type of business that focuses on buying and selling residential properties, offices, shop houses, apartments and so on, either directly or indirectly, which are run by individuals or institutions (services) in the property sector with large capital or without large capital.
In 2021, the property business market has indeed produced many successful property investors with large profits. No wonder why some people, especially beginners, are more interested in shifting their investment to the property sector. But remember, the risk of investing in property is also quite high. If you can’t control it, it could be a financial disaster and the future of business development.
Pay Off Debt
The first method of investing in the property business is to pay off the debt first, to get rid of the burden. It is not uncommon for property investors to take the debt method in starting their investment steps in the property sector. This is not recommended. However, the average person, let alone a beginner, probably shouldn’t take this debt step.
Preferably, the money used for property investment is not from borrowed money. In addition, you can postpone the intention to buy a property unit in advance if you feel you have debt arrears. Because, this is not the right step.
Have Repair Skills
If you are a graduate of civil engineering or have a talent for building renovation / repair skills, such as painting walls, repairing clogged drains, replacing ceilings, plastering walls, or repairing other parts of damaged buildings.
Maybe there is still, some people will think of transferring some of the work to craftsmen or experts rather than doing it yourself a waste of time.
If you only have one building to invest in, then there is no problem thinking that way. But what if you own two or more properties? Of course this can spend a lot of money and reduce the profits of the property business, right? so it is better to do the repair yourself.
Calculating the Profit Margin
Usually large companies target a profit from a turnover of around 5% -7%. Meanwhile, individual investment must target a profit of at least 10% of the investment value. However, make sure to set aside a maintenance fee of 1% of the property’s value each year.
Do not forget also other expenses, such as taxes, insurance, and other monthly expenses such as pest control, electricity, water and so on.
Avoid Buying Used Buildings / Old Buildings
Perhaps many are tempted to buy old buildings at low prices, with the lure of a discount. to be used as an investment property, after the building is renovated for beginners this is not a good idea, but if you are experienced or good at calculating the cost of renovating it does not cost a lot.
The way of a small property business for beginners, without large capital is to look for a building with a price below the market average but the renovation is minimal and if it is sold it is still profitable.
Calculating Operational Costs
This is often forgotten, from the attention of property business people, because they are too confident. In fact, in order to avoid unexpected losses, it is necessary to calculate operational costs. Make sure you calculate in detail and carefully the operational costs for each unit’s needs, starting from repair costs, transportation, tax costs and other unexpected costs, as a whole the unit you have, make sure the operational costs are not much.
Selecting a Low-End Property Category
The property business strategy is to choose a property category that is still low-end, meaning that if you want to invest in a home, you can choose a house with simple / small specifications first. The goal in this principle that is prioritized is to add assets first. When the assets begin to develop, you can add capital from the profits that have been obtained to develop other property businesses that you have.
Look at the Regional Planning Map
After you are determined to undertake investing in the property industry, now is the time to look outside to determine the right location. We recommend that you look for a lot of information about regional planning in the place you want to invest in, be it from friends, fellow businessmen, or good friends with the government in the city planning or urban area planning.
For example area X circulating electronic news and newspapers will be used as a new industrial area, this means a golden opportunity that must be picked up to increase the value of investment returns.
The tips are by using the area to invest in property. Due to the advantages of the property business in that location, we can be sure that the price will quickly soar if a new economic industry has entered the area. therefore buy buildings in the area before the industry enters.
Choose the Right Location
Now, after knowing that there is an industry that will be built, the next step is to determine the right and strategic location. This is the most important point, because the location will increase the benefits of the property business and will determine the success or failure of your property investment in the future.
Make sure to look for areas with the lowest tax costs but you have to pay taxes, as well as environmentally appropriate areas with low crime rates and free from flooding, besides that another factor in the success of the property business is the location near schools, markets / restaurants. Also read: 7 Small Profit Capital Home Business Ideas