Long-term vs short-term investments?

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This topic contains 2 replies, has 1 voice, and was last updated by Avatar John Katsavitis 2 weeks, 5 days ago.

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  • #19519 Reply
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    NewInvestor

    I am new to propert investment. Can someone explain how short-term investors operate in property market? From what I understand it’s a relatively slow moving dynamic compared to share trading for example. So I am strugling to understand how does one make any profit in the short-term?

  • #19521 Reply
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    GrantMaximus

    You are correct in that property Investors essentially fall into one of two buckets, Short-Term and Long-Term Investors. The difference may seem pretty self-explanatory however, the strategies that they implement can differ greatly.

    Typically, Investors seeking short-term capital growth are the ‘quick flippers’, who will look to turn a profit on a property within a short period of time, normally less than 18 months. Generally during this time, they will look to make improvements to the home to increase its capital value to then sell it for a profit. The best property investment locations to do this are where you can purchase a property at a price under the median property value for the area and increase that value to either reach the median or surpass it through increasing its capital value.

    Investors seeking long-term capital growth are in for the long haul and will look to generate a profit on a property over a period that normally spans more than 5 years. Long-Term Property Investors will generaly conduct an extensive research into the future potential of the location they are investing in, paying a lot of attention to a number of fundamental variables that are well described in one of the blog posts here.

  • #20435 Reply
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    John Katsavitis

    Or you can have both short and long term simultaneously so to speak. I guess the key there would be to have a strategy in place where you can access equity by refinancing the mortgage you have on the investment. This would mean you still retain the property and leverage on its long term potential, that is, you don’t have to ‘flip it’ as GrantMaximus said while also being able to access some of the equity in a short term span.

    I guess the most important thing in this instance would be to have a purchasing strategy in place such as buying below median value while also doing it in a area that is forecasted to grow further.

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