As our economy moves forward and a new property cycle starts, fortunes will be created by some group of investors. However, if history repeats itself, many real estate investors will not get the financial independence they deserve, so I wish to share my time tested gold rules of land investing so you have got a roadmap to assist you get through the next property tide.

  1. Invest, do not speculate

Though they think they are investing, many real estate investors are now speculating. They purchase a home emotionally, often near where they live, where they vacation or where they would like to retire and then hope or pray that the market will appreciate. They are entirely dependent on external market conditions to generate a profit. Bright investors do it differently. They make educated investment decisions based on research and get a property under its intrinsic worth, in a place have above average long term capital growth and add value creating some excess capital growth. They never invest in anything they do not understand. Throughout the boom years investors’ appetite for yields took them into exotic terrain, such as home choices or development. Promoters often promised large profits using opaque schemes, which often resulted in significant losses.

  1. It is about the property

During the boom many Investors forgot the age-old house principles of purchasing the best property they could afford in an established location. Rather they got sidetracked by glamorous fund or taxation plans; and a few lost out.

Real Estate

  1. Property is a high growth low yield investment

While the argument about capital expansion or cash flow will rage forever, there’s absolutely not any doubt in my mind that the only way to acquire true riches from property is through capital growth. The significant factor affecting capital growth in property values is the connection between demand and supply.

  1. Land appreciates.

While most investors recognize that property appreciates in value, it is not quite as straightforward as that. Not all property is made equal and not all land enjoys at precisely the exact same rate. In the outer world of our capital cities there is lots of property and a lot of the demand comes from a small part of the market – first home buyers. This keeps a lid on capital growth and makes such places poor investment prospects.

Another factor that makes properties in these regions poor investments is the minimal land to total asset ratio. Usually land only constitutes around 50 percent of the whole value of their property.