Dos and Don’ts of Property Investment

Dos and Don'ts of Property Investment
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Sometimes the easiest solution to a cruncher is to bring it down to its ones and zeros. Property investment can look pretty intimidating what with all the efforts that go into actualizing it and the financial demands that it prompts but hey everything can be simplified once you have a mental image of the steps and components involved. With that said, here’s a list of considerations you should look into before investing in property. 

The Dos:

Do Research the Platform

Whether you are investing directly into a housing project, opting for ready properties or even delving into the online world of property investment ie; crowdfunding platforms, due diligence always applies. Research and property investment take to each other like ducks to water so you really ought to put your investment platform through a good screening. Good research leads to good investment choices – that’s the not-so-secret sauce to investment success. You need to know all the parties involved in your investment and the manner of their conduct and services. If you don’t understand how and why a company makes money, pull back from investing. Consider important aspects that include any required licences, permits, partnership agreements, transparency, and clarity of the platform and only invest in what you understand.

As a platform, we strive to match our community of crowd-investors to the best impact investment property projects in emerging Indonesia. We obtain, verify and feature all the important project information for you so you can make informed investment decisions. Approved projects must be Shariah compliant, be transparent, and clear. 

Do Expect a Level of Risk

You need to understand that there will always be a risk of losses, including even the loss of your capital. This does not only apply to real estate but is the nature of investments in general. Of course the risk varies from one project or company to another, but one thing for sure is that there are no guarantees, so have realistic expectations. What you can do is look into the methods of risk mitigation provided by the platforms or sectors that you are investing in and weigh them relative to your appetite and threshold of risk. Property of course is a perennial favourite since it typically has fixed assets as collateral, which can provide a degree of protection against capital loss.

Do Diversify Your Investment

Property investment involves a great variety of choices. Your return on investment will vary according to the type of properties that you select, the  location and the market prospects. Today, a number of platforms including Ethis allow you to invest in property in the development and construction stage, where you can essentially profit like a property developer. 

Some people opt to invest in a single project at a time and live by a “don’t have too many irons in the fire” motto. Well this is one of those instances when you should definitely toss more irons into that flame. A range of property investments serve as safety nets for you whereby when one property investment may prove frail in returns or not perform as expected, another could prosper and cover any losses that previously ensued. Not only that, but investing in multiple projects will also diversify your investment portfolio and over time assist you to have a clear image of what types of projects work best for you.

Do Your Market Research

You know how they say understanding the questions is half the answer? Well.. yes! Being familiar with the market cuts half the work for you and eliminates a great deal of risk from your investments. Before investing, read up and try understand the sale prospects, the suitability of the location, companies that project sustainable growth and can still thrive despite economic fluctuation and the main criteria that are relevant to the industry. Growing capital should be your end goal and so make sure you take a look at all the external aspects that can affect the completion and realisation of your investment.

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Do Expect Delays

The rule of investing in property is Patience. Patience. And patience. Property investments unlike stocks or bonds are tangible and actualized in the real world. You are working with projects that are under construction, people who are looking for a potential home and a whole lot of life decisions, and paperwork involved. So you have to keep in mind that investments will be as unpredictable as those aspects can be. You need to anticipate unforeseen circumstances and direct your efforts into managing and predicting possible ways to speed up your processes. Most importantly, give yourself time to cultivate proper plans and know that patience here is not merely a moral trait but rather an imperative to success. 

The Don’ts:

Don’t Invest Too Little

little investment

Investing diligently and beginning small is a key aspect for any beginner, so why would we still not suggest investing a little amount? Well this is mainly due to the fact that property investments are time-bound. If you invest little, you will have to wait a certain period of time before you get back your initial investment. Thus the returns made from a small investment can simply seem not worth it and could potentially even dishearten you from further investing. It is proposed that you put together a good amount that would assist you in having returns worthy of your wait. Of course, always invest within your means.

Don’t Get Too Comfortable

Investing in property isn’t a one stop kind of venture; it’s more like parenting, the projects you invest in cannot simply be disconnected from you once you have made your contributions. The second phase, post the disbursement of funds into a project, is as important as your first step. This includes tracking your investment progress, checking on the properties and being on top of things constantly.

Don’t Invest Money That You Don’t Have

Never invest money that you might need. Investments always come with risks and so investing while you are financially struggling in hopes for quick returns or growth in capital would be a very tricky move and could be a potential cause for hardship for your future. Investing in property is characterized by the need for patient and if you’re still struggling to balance your finances and spending, then you are probably not up for the wait. So ensure that you get your finances in line before committing to any investment whether small or big. You can journey towards this by documenting your finances, looking at your priority expenditures and getting yourself a safety net with savings first.

Don’t be Afraid of Asking Questions

In the world of investment, you simply cannot be a passive bystander. When dealing with different parties and sectors, don’t be afraid to seek out all information and data that might assist you in making informed decisions about your investment. Receiving clear information and progress updates about your investment to some extent is highly dependant on the sectors you are dealing with. The great thing about property is that it is a visible investment which means updates and progress is something that is seen instantly. Thus, Invest in companies that possess a great management team that is responsive, tolerant and obliging. You may even channel the services of professionals in the field to provide you with a heading and direction towards clever investments.

Don’t Get Carried Away

Be sure to maintain caution when choosing investments and be very weary as to not over invest. Occasionally, a strong return on investment serves as a great booster of hopes where the sky becomes the limit and investors become over ambitious to gain more and more. Property is quite the alluring field and can easily make you feel in control since its tangible and the results are usually gratifying. These are the instances for you to always take a step back, analyse the situation and not rush a future decision. Different properties have different strengths and due to many factors including location, demand and the type of property, success will definitely not apply to all in the same manner. Remember, there is a difference between investing and gambling and so find the line and treat each one accordingly. 

Read more Bear Market: Top 4 Money Mistakes to Avoid Right Now

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Ethis Malaysia: Islamic Equity Crowdfunding
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We operate ethical investment platforms approved by regulators in Indonesia, Malaysia, and Dubai, and also run a charity platform Global Sadaqah serving ordinary people, high-net-worth individuals, corporates and government entities. Best known for crowdfunding impact investments for Indonesian social housing development projects we adhere to the United Nations Global Compact ethical standards and are based on Islamic finance.