Have you ever thought about making money by selling and buying properties? If you are new to this, you are probably thinking that to make money, you need to sell the property, but the reality is quite different. If you want to make good money from properties, the initial step you need to think over is the property you buy. All the work needs to be put into planning on buying and understanding what properties are in demand in the market right now.
In short, you need to make smart and clever investments if you want to make a profit from properties.
The first step in understanding investments is to make sure you have all the basics covered. This includes having an understanding of what ROI is and how you can calculate it.
DAVE CHONG
Decorated with achievements as the IQI Group Vice President as well as the founder of IQI Eliteone Group, Dave Chong shared his two-cents on how one can get on the fast track of wealth through cash cows and investments.
Starting out as a part time real estate negotiator, Dave went on to establishing it as a successful career for himself over a short span of eight years. In his first five weeks of joining IQI, he managed to seal five deals, with a commission of over RM50,000.
However, he was dejected when he faced cancellations at the end of the month. Despite being down in the slumps, Dave picked himself back up and convinced himself that this was only a slight setback in his journey.
In 2014, Dave went on to becoming one of the Top 10 Achievers in IQI and was promoted to team leader and team manager thereof. To date, Dave’s Team has closed over RM1 billion in sales for IQI, laminating is outstanding feat.
What is ROI
The full form of ROI is the return on investment. It is used to evaluate how good or bad an investment has performed. It is an investment measure that can be used to determine how much profit you will make from an investment. It is expressed in percentages.
To break it down into blocks. The initial block contains the information of the initial money you put in, the second block contains the investment growth, and the third block contains the final result or value that you get.
Imagine if you put in an investment of 100,000 at the start of this year in a property, and the growth in 10 years is 200,000. The difference between the two values, that is, 100,000, is the profit you have made from your investment.
The formula you can use to calculate return on investment is the profit you make over the initial value. Multiply the result by 100 to get the value in the form of a percentage.
There are many reasons why we use ROI. One of these reasons that makes it so crucial in the game of investment is that it helps you understand if it is better to invest your money into something than to put it into food. If the money you are putting in as an investment is better than fd, then you will be able to make a profit from your investments.
Right now, in the market, there are many areas of investment vehicles available. From properties to NFTs to cryptocurrencies, the market is vast and blooming with possibilities.
With all these options available, you might be wondering about where the property stands in terms of ranking in best to worst investments. While it might not be the hottest investment vehicle in the market, it sure is something you should look into if you are planning on investing in something.
The reason why is simple. Property is the investment vehicle that might be slow in the market, but it is stable. Investing in property is beneficial because, unlike other investment vehicles, it does not fluctuate as much. Stable growth in property implies that the risk of investment here is less. A similar pattern of stable investment outcomes of property can be seen in countries throughout the world. From the UK to India, all countries show similar stability and equilibrium in the property market.
Another key feature to know about property investment is that it can be leveraged with the help of OPM. OPM stands for other people’s money. This OPM is the bank.
If you go to the bank to ask for a loan for buying a property, you will be able to get it within any issues.
Property and shares differ from each other.
For example, if you want to make RM.100,000 in shares in the future, and if we assume a 100% return, you might be wondering how much initial cost you will need to put in? The answer is simple, you will have to put in RM.100,000. So, if you want to make a profit of RM. 100,000 your initial investments also need to be RM. 100,000.
Property is different. If you want to make RM. 100,000 through the property, you might be wondering how much money you need to put in right now. That depends on whether the property has a rebate or not. This cuts down the cost of buying a property with the help of a leveraging tool which is the OPM.
Principle Reducing Mortgage
When you buy or rent a property, there are usually two things associated with it. The none recoverable expenses and the recoverable expenses. The none recoverable expenses include interests and maintenance fees, while the recoverable expenses include the principle. The principle is indirectly the money that you save for yourself, which you can keep when you sell a property. This is why it is also called force money.
The ideal scenario is for your rental to cover all your recoverable and non-recoverable expenses. Keeping a rent that covers interest, as well as maintenance fees, is crucial. Furthermore, you can go one step further and have a tenant rental as well, which will be obtained after subtracting the unrecoverable expenses from your rental.
You might be wondering whether you should buy your property using your cash or money. You might think this is good, but the reality is the opposite. You can buy a property by asking for a loan. If you do so, this will be beneficial for you in the long run as well.
Before buying a property, make sure the basics are covered. For example, can the property you have bought be easy to rent out? Another question to ponder over is how much should the rent be compared to the market? You need to choose a price that will not only meet your recoverable and unrecoverable expenses but is also competitive in the market. You also need to consider what will happen to the property in the long run. Will you be able to make a profit from it or not? And lastly, when you come done selling it, will it be sold easily? And at the rate you have in mind.
