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:

 

Key Topics

– Diversification

– What is “flipping”?

– Investing in Off Plan

– Buy to let

– Land Investments

Property Investment Strategy

Diversification

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.

(www.soft-claws.co.ukwww.spuk.comwww.softpaws.co.uk)

 

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

(www.cityquays.co.uk)

 

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.

 

SUMMARY

 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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