Know your market

There are many ways to accumulate wealth through property investment. The key to success is to know your market and be aware of all of the different factors that can make or break your venture.

It is very important to remember, for example, that when building or flipping houses to sell, it is not always the high-end properties that turn a profit.

Certain areas produce high returns simply due to consistent demand and a niche market.

Building or flipping smaller houses worth $200,000 can be a more manageable and safer investment than tackling an $800,000 property in a fluctuating market.

Building houses

Potential profits do not lie only in new development areas, nor in upscale neighbourhoods.

Finding a plot of land in an area with low vacancy and similar value can set you up for a guaranteed return on your investment.

Of course finding a lot is just the beginning – you must also build smartly and within your budget to turn a profit.

As always, the time it takes to research a purchase of land is always worth it – dropping a project or shifting focus is always easier and less costly at the beginning than at any other stage.

Flipping houses

Buying a house to renovate and sell can be a lucrative alternative to building from scratch. However, it is always worth a thorough inspection prior to purchase.

Fundamental construction standards must be met to ensure your project does not turn into a money pit.

Pest infestations or water damage is not always visible to the naked eye, but fixing it can cost enough to completely eliminate your profit margin.

Take the time to learn to know your market. Try not to make impulse purchases in a hot market – the price may be right, but the risk of buying a lemon is greater than missing out on a good deal.

By Steve McKnight

Steve McKnight, the founder of PropertyInvesting.com, is a respected property investing authority as well as Australia's #1 best-selling business author.