Short Term/ Long Term Real Estate Investing

"Buy low and sell high" isn't that a term you hear so very often? It is the general concept of what most investors think, regardless of what investments they are involved in. During a bad economy, most people would feel cash strapped and would want to spend lesser. But under the trained eyes of a real estate investor, there isn't a better opportunity to "buy low" during such an economy. Furthermore, "selling high" isn't an easy task. You have to show your investors what sort of profits your property is able to draw in, before you are able to "sell high".

Before you launch yourself in real estate investing, have you ever thought of how to go about doing it? The first steps would be to plan out what sort of route you are planning to take, either the short term route or the long term route. Here we will tell you more about these routes before you start embarking on your journey to real estate investment.

The first route would be short term investment. As the name suggest, buying and selling of the property should occur within a couple of years, usually within 2 to 3 years. If you are interested in taking up the short term route, "buying low" is only half of the journey done. You will need to have the mindset that you might lose the cash that you invested in your property, as it will be difficult in finding a buyer who fits your "sell high" requirement.

If you have found your buyer, do keep in mind a few things so as to maximize your profits. The amount of capital appreciation should fall within 30% before the startup costs, such as the agent's brokerage, legal fees and furnishing cost, are factored in. The overall transaction cost usually falls between 7-8%, leaving a respectable amount of profit from the investment.

The second route would be long term investment, which usually occurs over a period of 10 to 15 years. Because of the longer time span, certain factors, such as population growth and inflation, should be taken into consideration. Due to medical advancements, we can definitely expect there will be population growth. Because the supply of land we can develop on is limited, the value of land increases each year due to inflation. Hence, we can expect an appreciation in value for your property. Even if you have bought your property at a high price, such as during the 1997 property boom, with patience, you can still get back your cash, maybe even profit from it.

What we currently have here is based on past experiences. What you should do would be to plan for the future based on what we have learnt from the past. Just like the famous saying goes, "if you fail to plan, you plan to fail". Real estate investment is never easy, but with proper planning, it allows you to know what to expect and how to react to it.

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