Experts Share 7 Key Strategies to Succeed in Real Estate Investment
When talking about investment with high returns in Cambodia, real estate is frequently one of the top choices. However, real estate investment is almost similar to gambling. Some succeed and become millionaires in just a short period, while some fail and end up being in debt.
Our Construction & Property Magazine reporter sat down with three experts from the Cambodia Valuers and Estate Agents Association (CVEA) to discuss how to effectively invest in real estate in Cambodia. They shared their 7 Key Strategies:
1) Information Determines Whether You Win or Lose
CVEA Vice-President Man Chandy said that the core factor determining a successful investment is information, and true and reliable information. With enough information, one will rarely go wrong.
“Having information here does not mean just knowing. It must be in-depth. For example, you heard there will a mega project in an area and you want to buy a land plot there ahead for future profit. Before doing that, you have to study carefully the details of the project, especially the timeline. Then, you can expect how long your money will be buried in the land there,” said Mr Chandy.
“Some projects might take 10 to 20 years. If you don’t have a big cash flow, you can’t do it even though it might give a huge return. So, study carefully, not just listen to people. For example, on the east side of Phnom Penh, we know the government plans to build a bridge, but we never know when. So, plan accordingly based on your information and cash flow,” he exaplained.
2) Stay Focused
According to Mr Chandy, in order to gain in-depth information about a particular area, we have to keep a close eye on that area only, rather than trying to catch too many fish in one hand.
“For me, I prefer to focus. Most people do not have that much money to buy a lot of land. Besides, we do not have time to study the potential of everywhere. So, just focus. For example, you can choose to monitor the property price within a commune in the south of Phnom Penh,” said Mr Chandy.
“Let’s say Veng Sreng and Prey Sor areas are catching up now. Definitely, you will make profits because you have been monitoring the market cycle long enough before investing. If you stay focused, you will have a lot of networks and connections there. Given the pandemic like this, you might get a property below the price faster than anyone else,” he added.
3) Know How to Evaluate Real Estate
CVEA President Chrek Soknim said that the most essential task to do before buying real estate is to know whether the price is lower or higher than the market price.
“For experienced investors, they would know how to do that. However, for new investors, you can just consult professional analysts. I mean more than one analyst so that you can compare their answers. The service is broadly available and not pricy,” said Mr Soknum.
“Evaluation is even more essential if you invest in property with bank loans. If you fail to evaluate and the return from the property is lower than the interest rate, then you will be in trouble,” he added.
4) Learn From Success People
According to Chrek Soknim, first-time investors frequently do not where and how to start. Thus, being friends with the experienced investors is the best you can do.
“If you don’t know how to invest, just be friends with those who know. If you want to make a profit, you have to associate with those successful investors. However, you should not go and ask directly from them. Just meet and talk, then you will gradually learn from them,” said Mr Soknim.
This strategy is most important compared to the first three because if we can be with the right person, we will learn those points automatically.
5) Dare to Invest and Grab Opportunity when Possible
Once you practice the first four strategies above, now comes the core action part, whether or not you are fast enough to decide to invest, or in other words do you dare to invest?
“If you have cash, make fast decisions because good opportunities won’t last long. If you do not have cash, learn how to use other people’s money to make profits; in short, know how to use bank loans to make profits,” said Mr Soknim.
“It’s not hard to get a bank loan now. Interest rates are also starting to get lower due to the competitive market. For a housing loan, you can get up to 70% of the price. For land, maybe up to 50%,” he added.
6) Know Your Own Cash Flow
Daring to invest is a good thing, but it also comes with risks. Thus, knowing your own financial situation is very vital. CVEA Real Estate Investment Advisor Keam Seaklong said that before investing, one must very carefully study their own cash flow such as income and expenses.
“For example, if you have limited cash flow, you might get into trouble when investing in land that provides a return in the next 5 to 10 years. Thus, you have to check on your cash and find other alternatives. For example, you can invest in a house or a condo, in a great location. Even though it is less profitable than land, it can give you monthly return from rent if it is in a high-demand location,” said Mr Seaklong.
“Thus, you have to analyse carefully. Do not just follow people and get a bank loan to buy land. Then you will have to pay the interest rate for 5 or 10 years if the land is in a bad location,” he added.
7) Use Flipping Strategy
If you are beginning, you should use the flipping strategy, meaning buying and selling in a short period of time without holding any property for too long. This method matches well with those who have a limited budget and it can also prevent the risk of lack of cash flow.
“For beginners, you should buy and sell fast. Do not feel too attached to the land, otherwise, you won’t get profit. Though buying and selling in a short period won’t give much profit, but you earn many small profits frequently. More importantly, you contribute to the market flow as well,” said Mr Soknim.
In summary, the 7 Key Strategies are only fundamental factors. There are many other points to consider as each individual has different financial and social status.
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