10-steps to building wealth with property even if you are not a millionaire
Let’s break the misconception: Real estate investing isn’t just for millionaires. It’s for everybody who wants to start building wealth.
You’ve probably heard of investments before in the form of stocks, bonds, or mutual funds. But what about properties? Whether you are looking to improve your cash flow situation, to have a steady income, or to multiply your wealth, properties are a secure form of investment that can help you achieve your goal.
We’ve created a list of ten key steps that will help you gain more confidence in your skills for getting started.
#Step 1: Identify your type
First things first, before you enter the real estate business environment, you need to analyze and identify what type of buyer and seller you are.
But how do you determine your type?
Well, you need to take some time to understand what are your preferences and comfort levels when it comes to managing things like mortgage and cash flow. In other words, identify what your limits are and where you draw the line.
Think about your tolerance for risk and try to put a number to it. Next, think of an ideal cash flow situation, and, once again, try to put a number to it.
#Step 2: Check your loan eligibility
When you are just getting started on the property, you may need to take a loan to increase your initial capital. Thus, it would be wise to check if you are eligible and which bank can offer you the most advantageous loan option.
Over time, as your savings and income will grow, your loan-to-limits will change. These limits are also influenced by how many times you have taken loans in the past. But for now, check your options based on your current cash flow situation.
Also, it helps to be consistent on your loan payment and show the bank that you are a reliable payee. This way, you increase your chances of getting a loan at the quantum you need and when you need it.
#Step 3: Determine your budget
The best way to get a clear idea of what you are comfortable with when it comes to cash flow and mortgages management is to dig deeper into your budget’s situation.
You need to start by setting a budget. In other words, decide how much money you need and can afford to put into the property. By setting a budget that works for you, you avoid dealing with stress and frustration.
#Step 4: Choose a focus area
One thing you should absolutely avoid is getting lost when trying to gather information about property transactions from multiple areas. And, to prevent this, you need to choose an area to focus on entirely.
Choose a specific district and gather all the information. This allows you to be focused on everything that happens in that particular area, and you can be more prompt when making decisions on what makes a good buy.
#Step 5: Get familiar with your focus area
There are several things you should zoom into to get familiar with the particular district you have chosen to focus on. Gather information about the current developments in the area, the on-going projects, and the resale units that are available there.
You should also consider talking with people in the area who lives in the area.
#Step 6: Shortlist units from the focus area
There are 12 factors you should consider to compare all the units in your focus area:
- Land size
- Size of the unit
- Age of the property
- Number of units
- Rental yield
- Surrounding launch prices
- Demand vs. supply
#Step 7: Check past transacted peak prices
So, you’ve decided on a unit, and you are eager to buy it. But slow down a bit! You now need to determine whether or not it represents excellent value to you.
How do you do that?
You look at past transacted peak prices to determine whether or not the current prices have gone beyond them. This way, you can determine what the potential upside for the property is.
#Step 8: Check the latest launch prices
Another factor that will help you determine if a property is worth buying in the long term is the latest launch price.
Checking this factor is particularly essential when you are considering resale or properties in hot demand.
#Step 9: Learn the difference between asking and transacted price
How do you determine that an asking price is worth paying?
The asking price is the amount of money the seller is willing to sell for, whereas the transacted price is the actual sale and purchase price. Thus, knowing this, when the asking price is lower than the transacted amount, you may be looking at a great bargain.
#Step 10: Build a network
Last but not least, make sure that you connect with the right agents. The right agents will show you the timely and accurate information you need to make the right investment decision.
The correct agent should also have a clear understanding of your needs and have your best interest at heart (instead of their own). Learn to exercise good judgement and don't be afraid to seek a different opinion if you feel the need to do so.