Risks To Be Aware of Before Investing in Foreign Property
Temptation for a quick buck or sky-high guaranteed yields can often result blowing your hard earned cash in the blink of an eye! The first big mistake most newbie property investors make is adopting what I call the HMIS approach. HMIS is a simple acronym for Herd Mentality Investing Strategy.
Simply put, this investor only makes a move once he/she sees others earning returns hand over fist and fails to realize that the market is beginning to reach maturity or even it's peak when this is happening. When in reality this is probably a signal to start selling - not buying!
Another huge error is lack of proper research and due diligence.
Jumping in on a whim based on a few web pages telling you it's the thing to be in can be a very haphazard strategy - so the big clue could be to seek help from a professional within the sector before committing your cash.
Thirdly, seeking a little 'social proof' can help you avoid disappointment.
Try and find someone who's already in the game and had had dealings with the companies you’re considering using.
Find out how long they've been in the marketplace and upon what information or analysis their recommendations are based upon.
In other words, really try and get a feel for what's going on by speaking with those who've had a real-life experience of the investment.
Another often overlooked factor is the ability of the company you're dealing with to provide you with good tenant who pays the rent on time and will stay the course of the tenancy.
Be sure to clarify a competent property management partner who is local and savvy to the neighborhood is in place and ready to take over just as soon as your purchase is finalized.
And if you can, try to speak directly with the management company prior to any purchase. Don’t be afraid to ask them to explain their screening and referencing processes. And be sure to ask what procedures are followed for routine maintenance work; dealing with city notices and code violations; late or non payment or rent; insurance claims; tax reporting obligations; evictions and normal day to day reporting functions toward you the, the landlord.
Just as important, find out what technology they employ within the company to assist their day to day operations. Property management is a time intensive business and profit can only be made if the management company has efficient processes in place. Without which, it is more than likely they will buckle under the weight of work and collapse somewhere down the road leaving you high and dry.
And finally get complete transparency on all associated management costs and charges.
The last point is the affordability. Some experts advise: "only invest what you can afford to lose". Whilst I wouldn't entirely advocate that particular method, I would say don't expect your investment to bear fruit overnight - in other words be prepared to stay in a while, All good and worthwhile investments have ideal hold periods. So certain to bear this in mind before you invest and be prepared to be patient.
To end with I'd say this, "Go into all your investments with your eyes wide open".
Investing of any kind is a game for grownups, and like any game you can win and lose. The name of this game is to take your time and access all the probabilities, upsides and downsides and also to stay in touch with reality. Don’t get blind sided by an investment or emotionally charged over the prospects for high returns. Remember, you make money by saving money. sjordan
Temptation for a quick buck or sky-high guaranteed yields can often result blowing your hard earned cash in the blink of an eye! The first big mistake most newbie property investors make is adopting what I call the HMIS approach. HMIS is a simple acronym for Herd Mentality Investing Strategy.
Simply put, this investor only makes a move once he/she sees others earning returns hand over fist and fails to realize that the market is beginning to reach maturity or even it's peak when this is happening. When in reality this is probably a signal to start selling - not buying!
Another huge error is lack of proper research and due diligence.
Jumping in on a whim based on a few web pages telling you it's the thing to be in can be a very haphazard strategy - so the big clue could be to seek help from a professional within the sector before committing your cash.
Thirdly, seeking a little 'social proof' can help you avoid disappointment.
Try and find someone who's already in the game and had had dealings with the companies you’re considering using.
Find out how long they've been in the marketplace and upon what information or analysis their recommendations are based upon.
In other words, really try and get a feel for what's going on by speaking with those who've had a real-life experience of the investment.
Another often overlooked factor is the ability of the company you're dealing with to provide you with good tenant who pays the rent on time and will stay the course of the tenancy.
Be sure to clarify a competent property management partner who is local and savvy to the neighborhood is in place and ready to take over just as soon as your purchase is finalized.
And if you can, try to speak directly with the management company prior to any purchase. Don’t be afraid to ask them to explain their screening and referencing processes. And be sure to ask what procedures are followed for routine maintenance work; dealing with city notices and code violations; late or non payment or rent; insurance claims; tax reporting obligations; evictions and normal day to day reporting functions toward you the, the landlord.
Just as important, find out what technology they employ within the company to assist their day to day operations. Property management is a time intensive business and profit can only be made if the management company has efficient processes in place. Without which, it is more than likely they will buckle under the weight of work and collapse somewhere down the road leaving you high and dry.
And finally get complete transparency on all associated management costs and charges.
The last point is the affordability. Some experts advise: "only invest what you can afford to lose". Whilst I wouldn't entirely advocate that particular method, I would say don't expect your investment to bear fruit overnight - in other words be prepared to stay in a while, All good and worthwhile investments have ideal hold periods. So certain to bear this in mind before you invest and be prepared to be patient.
To end with I'd say this, "Go into all your investments with your eyes wide open".
Investing of any kind is a game for grownups, and like any game you can win and lose. The name of this game is to take your time and access all the probabilities, upsides and downsides and also to stay in touch with reality. Don’t get blind sided by an investment or emotionally charged over the prospects for high returns. Remember, you make money by saving money. sjordan