Manage Property Asset as Business: Tips for Beginner
If you choose property as your investment (portfolio), and want to buy property that bundled (land and building), the price value will have lots variation. There is land price same as building price, there is land price higher that building that stand on it, or land price lower that the building.
You have to make a diversification, so you do not get high risk, and can get more gain. Diversification in property use location and genre concept, for example office complex, home complex, or ware house area.
If you want resort as investment portfolio, build it at mountain or beach area, or place where people go for vacation or take a rest in weekend. And also warehouse, if it built at the middle of city, it will not prospect. Several experienced investors made ware house n area that close to toll road or highways.
Hotel as investment usually built in the middle of city or vacation area. Hotel has two functions, as overnight staying and also as discussion area. For personal dwelling, it can be built anywhere. But the chosen location should be near transportation center.
Hold and Sell
Manage property as business or become investment its mean that there is a period when the property hold otherwise sell. During the hold period, as business, you can rent it to others. Just make sure that your property located in strategies location. Property location determines how much that you can get money rent. Beautiful location result more money.
If the property not for rent, but hold until the “big day”, that property’s return on investment will low, because the property will damage or maybe the value smaller in the future. Property will always taken care if there are people whom become dweller.
In this case, investor has to have calculation of value increasing. You can use this formula: minimum interest rate at deposit plus tolerable risk of property investment. So, if average interest rate in hold period is 8%, then investor must have return on investment rate higher than 8% and the premium 4%-6%.
Property Cycles
To get maximum sell result and give result as expectation, you have to know property cycle. Usually, property price low when interest rate is high, and economical situation is not good. Property price will high if interest rates low and there are high fund exceed in the bank.
You also must understand how the property business works to get maximal return. For example, you have to understand about property taxation and property law.
Base on several research, property have to hold until three years to get maximum return.
