Know your property investments
On this page, director Peter To identifies the key property
investment strategies and provides insight in how he has
successfully built his extensive property portfolio:
– What is “flipping”?
– Investing in Off Plan
– Buy to let
– Land Investments
Property cash cows
Everyone seems to be talking about the need to “diversify”, in fact it’s one of those
words that financial advisors simply love to use.
However, the world’s second richest man said that if you are a “know something-
investor” then spreading your bets across a large number of stocks is likely to “hurt
your results and increase your risks”. Given that American billionaire Warren Buffett
has outperformed the market by a staggering 12% a year since 1965, you cannot
ignore such advice.
What Buffett means is that knowing what you are doing is the best way to reduce
risk. I agree with this.
I encourage you to get really good at what you do and accumulate your knowledge
and experience. This is much more important than diversification. I have several
investments but in a limited range of industries which I know well.
Being part of the new generation of marketers I understood selling online fairly well
so set up some e-commerce sites selling a product I loved.
My other obvious passion is property, so I invariably brought investment property
and now I am involved in the selling and renting of property for others
Indeed, if you diversify fully then you are less likely to be good at all the investments
you make. Whatever you save in mitigating risk you lose more in spreading your
effectiveness and skills thinly.
Diversification is a primary strategy if you decide to invest via stocks, unit trusts and
funds. As property often requires relatively large lumps of money it is very difficult
to diversify with £50,000 or £100,000 when investing in property directly.
But if you really do want to diversify, then I recommend that you:
1. Focus on what you are good at – stick to something you know well, so do your
research and be confident that you can achieve the results you want
If you are looking at other unfamiliar industries, find a expert in that field and
ask them if they can mentor you. Listen to their systems and follow it.
2. Look at the major external changes that can affect your investments. Don’t forget
to diversify, enough so that one such change will not affect your whole portfolio.
1- If you find a great investment it is probably safer putting more money in it than
spreading your money over lots of investments. If you do this, your are also
spreading your success and profit.
2- Flipping can be useful sometimes to make a quick profit as you avoid all of the
fees. Remember though if you cannot complete, you will lose your deposit.
3- Buying off plan is a win/win situation for the investor and developer. Check
them out though as they is a huge variety of these types of investments.
4- Buy to let, very involving but can be very rewarding. It is possible to generate
enough surplus cash each month to not have to rely on just your Wage. it is very
empowering once you achieve this.
5- Land can be a very profitable way to invest but make sure that you check things
out thoroughly before committing yourself.
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