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Property Investing And Possible Short Term Pitfalls

By Kaye Dennan

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Published: 10Feb2010
Word count: 491
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Building wealth through property purchasing or property investing as it is termed today, is an age old strategy for securing your financial future. It has been happening since time began and will continue to happen long after we have left this earth.

There is no more ground being developed on this earth, in fact it is being eroded away one way or another and this fact alone, and of course, along with the population growth, ensures that the value of the essential necessities of life will continue to grow in value. Oil, gold, timber, steel and food of all sorts are just other examples of how the demands of quantity forces the cost of items up if they are in short or limited supply.

As sure as prices go up they also go down, and the world economy has experienced this during 2008 and 2009. It is yet to be seen what 2010 will bring as countries around the world stagger to recover from the global crisis.

No matter what country you live in you would have either personally experienced an equity drop in real estate or you would have seen it happening somewhere near you. Some countries are recovering faster than others and some countries like Australia, did not actually suffer too severely during these last two years.

Again, back to where you live. You are probably now seeing different areas where real estate prices are starting to level out or in fact starting to increase in price as people feel more confident about their financial future with more job security.

Watch out for increased interest rates.

As each country rebounds from this crisis they will be increasing interest rates so if you are calculating your finances to purchase property and build a property investment portfolio, do factor in increased interest rates because they are a sure thing in the next year or two. No-one knows how much they will go up but up they will go, so make sure you have excess cash to absorb the interest rate increase. That is, unless you have another strategy for increasing rent, like upgrading the property.

Research your finance

It is a good idea to research your finance options and work out what will be the best for the next few years. A fixed loan which would mean you are paying a higher rate now could prevent increases for a few years and this may be a way to go. Or a split loan, fixed and variable might be more manageable. Check to see what costs there may be of creating a mortgage and any costs to get out of a mortgage as all these will cut into your property profit.

Thousands of people will start building property investment portfolios in the next few years and if you are going to be one of them, research in all areas will make your investments more secure.

With over 15 years being associated with it herself and will help clients for over 10 years, Kaye Dennan is keen to help others with the tips learnt over the years. For more insight into property investing go to Property Investment Know How.

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