The following are some considerations that should be look into before making the very important decision to be a property investor: Deciding what type of property to invest in makes a lot of difference in how the entire buying exercise plays out. Different types of properties require different types of investing techniques and commitments.

There are also considerations such as property market movements, which will generally affect non landed properties much more than landed ones. This of course not only applies to the sales market but also to the rental markets too. When considering making purchases, the investor should always try to include a clause in the agreement whereby there are options available and in place to nullify the agreements should the intended property to be purchased is not what it was portrayed to be.

Houses also present a better option for extensions, redesigning and remodeling possibilities and this can add value to the property. With flat, apartment and condo such exercises have limitations and various approvals have to be sought before any work can begin. Before committing to a purchase the buyer would also need to have a thorough inspection done on the property to ensure its justifying value.

Surveying the surrounding area is also something that should be done as it will defiantly have some bearing on the property value both in the present time and in the future. Preparing the adequate amount of financing is also something that is important when investing in property. The end result should be favorable to the investor, otherwise the entire exercise would have been wasteful and even worse debt contributing.

Finding potential property for investment

There are usually many types of property options available for the discerning investor, and taking the trouble and patience to find such properties will definitely be well worth the effort. It is important however to decide what kinds of real estate investment would most suit the needs and budget of the investor before actually venturing into the actual sourcing for the ideal fit.

There are several popular reasons as to why most investors in the property market make a particular purchase. These may include a purchase for long term rental income, for flip over profits, for long term investment and any other reasons that will contribute to some form of profit for the investor. Once this has been decided upon then the relevant corresponding properties can be identified and purchased to suit the specific intentions of the investor.

Preparing the finances for such investments, is also something that should be considered extensively as the form of financing used should not eventually cause the investor to be burdened with interest payments that will not make the investment viable after all. Besides this, having the expert advice of good legal counsel is also a very important service to have.

Such counsel, will be able to provide information on the responsibilities of both the owner and the tenant, should the investment be for rental purposes. Other advice can also be forthcoming through the services of legal counsel, such as the setting up of a company if the investor intends to make more purchases or investments in property.

Another point that most investors find important, is to invest in properties that are within a reasonable distance from the investor. This is to facilitate any transactions or the easy addressing of any problems that may arise after the successful purchase of the property.

Analyzing the property

The process of analyzing the intended returns the property is hoped to gain is done by three very different methods. They would include the gross yield, the net yield and the actual cash flow yield. All three methods will effectively show the investor the type of returns that are likely to be enjoyed through the purchase of the intended property.

Therefore before any commitment is made, it would be advantages to conduct any one of these analyzing tactics to ensure a wise investment is done. Basically the gross yield is where the rental is calculated on a 52 week ratio and then divided by the purchase price.

The figure derived from this calculation is the gross yield in percentage. This is a fairly simple way of making a calculation to deduce if the property will present a viable return. The net yield however is a little more complicated as it takes into account several different factors before making a suitable calculation on the profits it derives.

Points that are taken into consideration as reflected in the eventual calculations are such as, rates either local or regional whichever one applies, insurance costs, provisions for repairs and maintenance, vacancy periods and other expenses that might be incurred.

Therefore in this scenario the calculations would be based on the weekly rental multiplied by the on year period which is 52 weeks, whereupon the estimated expenses would be deducted from this figure and then the balance would be divided by the cost of the property.

The total derived would reflect the percentage of profit yielded. While the cash flow yield is also just an estimate it portrays a much clearer picture of the true yields when compared to the other two types. Here the interest rates and other expenses and taxes are also included in the general calculations.

Buying an investment property

When considering the investment property platform to make money, the individual must be sure that the adequate amounts of funds are available for the purchasing process. Most investment property forays, involve having to invest and then hold on to the said property for a long term period or when the property value rises to the point where the investor is satisfied with the yield and is ready to sell.

The types of property invested in and the location where the investment is situated all play a pivotal role in ensuring if the investment will eventually yield the desired returns. Unless the investor has the ready cash it would be rather unwise to invest in this form of property investment as the risks are considerably higher.

Excerpted from the book Flip'in Cash.

This excerpt has been edited and condensed for clarity.

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