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Buy property for profit

Buy property for profit

Author: Pranil Maharaj
Date: 2016-11-04
There are essentially two ways to approach investing in property: buying in the hope that the price will increase and you will be able to sell for a higher price in the near future (flipping) or buying a property for the rental income that it generates.

Flipping

The process of flipping is more speculation than investment.

Buying and then quickly selling a property at a higher price is only feasible if you can get the property at a price that is significantly below the market value, or if there is a very hot market and prices are rising continually. In both cases, the key is being able to resell - so you would have to be sure that there would be sufficient demand from buyers for your property when you resell.

The idea is that you should take a long-term view and try to keep the property until the bond is paid off (at which time most of the rent will be pure profit) or even never sell at all. This means that the property you choose to buy should be in an area where you expect people to still want to live (and rent) in future. This is also important because, if you ever do need to sell, you want to know that there will be potential buyers around.

Once your investment is cash flow-positive you can consider investing in another property, and in this way gradually build up your property portfolio and grow your wealth.