In the last post, I listed down 5 attributes or areas whats my broadband speed be considered when evaluating any type of investment. Well this time, I managed to come up with another 10 more! Bringing the total number of attributes to 15! It was really an achievement for me and I hope that you (who are reading this post right now) can benefit greatly from it.
This time, I want to sincerely share the rest of the 10 attributes with you...
6. Capital Gain Taxes on the Disposal of the Investment. On 1 April 2007, the Real Property Gain Tax (RPGT) was abolished, hence properties are now on par with other investments with regards to this point.
7. Annual Operating Costs such as Income Taxes, Other Expenses (e.g. Quit Rent, Assessments, etc), Interest Costs, Repairs, Management Fees, etc in up-keeping the investment. Properties fare badly in this regard.
8. Time taken for transaction to be completed, at the point of purchase and sale. On average, it takes anywhere from 3 months at the earliest to even 12 months in some instances for the property transaction to be completed and for money to exchange hands. For internet performance investments, it usually takes only 3 working days for contract to be concluded.
9. Stress or Headaches involved in maintaining and up-keeping your investments. With properties, you must be mentally prepared to deal with numerous problems with regards to property and tenant management issues.
10. Maintenance of Proper Records for Bookkeeping purposes if there are tax issues involved. Due to the various fees and charges involved, and the tax implications of them, it's absolutely essential to maintain proper bookkeeping records. The more properties you have, the more time, effort and money you will have to spend to ensure your records are kept properly.
11. One Time Effort Needed. Properties score a perfect 10 here. You only have to work once to acquire the property. Thereafter the property will continue working for you forever, as long as you keep it. On the other hand, portfolio investments requires regular monitoring as they are susceptible to any changes in the economic environment.
12. Impact of Mistakes. Mistakes are bound to be made by everyone especially new investors. The impact of buying the wrong property type, in the wrong location, taking the 'wrong' type of loans or having a nightmare tenant is thousands of dollars and a few years of your life to undo the damage done. Hence it's extremely important to get it right the first time and every time in all aspects of property investments. Mistakes are extremely costly both in money and time costs.
13. Market Efficiency: Are prices of the investment freely disseminated and known to everyone? Unlike mutual funds or stock prices, property prices are not freely available. To compound to the problem, valuation of properties is extremely subjective. The value of a property in the eyes of the seller, property negotiator, valuer, banker and buyer is different. This presents numerous challenges to novice investors as well as opportunities for savvy property investors who possess the knowledge of property values.
14. Investment Horizon: Is there any minimum period the investment ought to be kept? Properties should ideally be kept for a minimum of 3 to 5 years as the entry and exit costs are extremely high and the returns are only moderately powerful. Property investments are usually not recommended for streamyx news who want to get rich fast or for those who need their funds back in less than 3 years. However on some occasions, it's possible to make money by using "flipping" strategies by buying below market and disposing above market.
15. People Skills: Property investment is a people intensive business and you must be able to build rapport and get along well with real estate agents, sellers, tenants, lawyers, bankers, contractors, etc. Also you need to possess good negotiation skills and almost everything is negotiable. If you do not have these skills, you may not tm broadband real estate your investment "cup of tea".
I hope you now have a better idea of the pros and cons of real estate investments as compared to other investments. My suggestion is to have a diversified investment portfolio that contains both properties and other investments as opposed to concentrating everything on properties alone.
Till then, i'll be coming up with more articles related to properties as well as stock markets. For those who have missed the last post, kindly search for "Do Properties Make the Perfect Investment?" to go back to the last post where I shared the first 5 attributes! Alternatively, you can also find the last post in my profile.
Good luck and all the best! :-)
Cheers!
Milan Doshi
Independent Financial Trainer and Best-Selling Author.
Discover more at http://www.milandoshi.com
Milan Doshi is an Independent Financial Trainer and Director with Achievers Resource Centre Sdn Bhd. He is the founder of Malaysia's FIRST and BIGGEST Financial Program on Personal Money Management, Property and streamyx kl Market Investments since 1998 called "How You Can Get RICH from the Malaysian Property and Stock Markets". He has spoken to over 21,000 people and has over 1,500 graduates.
Over the years, Milan has helped Hundreds of Graduates make Thousands of Dollars through Smart Asset Allocation and Investment Strategies. This includes advice on Property Investments, Private Banking, Overseas Investment Opportunities, Trustee Services and much more. His advice is totally impartial, as he does not sell any financial products or services. He will completely change your Mindset towards Money and put You on a Stronger Financial Footing.
Find out more at milandoshi.com
