Investing in properties may be something you are interested in, but before you jump in on the trend, you have to ask yourself - how much do I know about property investing? At the beginning of the following property "boom," and soon enough, the world will be crawling with a group of investors. 

Many people want to get into property investing, but not all of them will attain the financial freedom they are hoping for. Despite the value of properties constantly increasing over the last few decades, 50% of those who started investing in property have sold up within 3 to 5 years. Those who remained, however, never really got past the first or in the second investment property. And, as we all know, no one becomes financially independent just by owning a single or even two properties. 

So, for a new investor to make the most out of the property cycle, he or she must first understand that investment in properties is a process. Just like any other process, you cannot skip a step and go straight to the end because that would be a recipe for failure - you have to go through every step.

The Three Stages of Property Investing

Most investors fail because they treat property investment as a "one-time event," and all they do is focus on what is currently happening without considering what should happen in the long run.

For instance, these investors tend to buy a property that appeals to them the most, often close to their place of residence. They think it would be a "great investment" because it is close to where they live. They assume that if they are the ones to live in it, they will be "happy."

Some of these investors also suffer from FOMO or Fear of Missing Out, which results in them lowering their selection criteria to get their hands on the properties in the market. Some are exceeding the budget they have set, while others are taking shortcuts to jump into the fast-moving market.

It is one of their biggest mistakes - they are in a hurry, and they often do not know that it takes most investors 20 or even 30 years to attain financial freedom through property investing. It is simply because the journey of a successful property investor involves three stages - learning the things they should not do, developing a winning formula, and building their cash machine.

Stage 1. Learning what they should not do.

The first stage is where property investors take their time to study everything they need to know about investing in properties. They read reliable articles online, watch videos on the internet, buy books, attend seminars, and listen to podcasts to understand successful investors' different points of view. From there, they develop their investment strategies.

This stage is not something that can be accomplished overnight or in a few weeks. This stage can last from 5 and even up to 10 years, but eventually, these investors will realize that what they are doing is not working for them. Some investors remain stuck in this level forever, while some have lost heart, lost money, and can no longer continue investing in properties. 

Step 2. Developing a winning formula.

Not every investor who started moves past stage 1, and only a few of them move up to this next stage. These investors are the ones who took the time to examine and develop what strategies work for them and what do not. By now, these investors have gathered a trusted team of independent professionals and have brainstormed on what strategy works best for them.

They have also learned not to pay attention to other people's opinions and not to easily believe everything they see on social media without verifying it first. These successful investors have formulated a strategic property plan that includes:

• A system that is proven to choose investment-grade properties.
• A financial plan that will help them fund not only their current properties but the next ones.

These investors have learned that there is high growth in residential real estate but a low-yield investment. So, instead of investing for cash flow, they buy those investment-grade properties in good locations to build their asset base. They know that capital growth will get them out of the race, but they value the importance of cash management enough to get them through the ups and downs of each cycle without withdrawing from the race.

Step 3. Building a cash machine.

Only a small percentage of property investors make it to the 3rd stage of the process. Of course, investors do not "literally" build a "cash machine." What they do is they slowly lower their loans to value ratio so that they would convert their property portfolio into a money-making machine. 

It is the stage where these property investors know that they are on a winning formula and strategically use their resources to head efficiently and safely to their financial objectives. In this stage, they are more in control of their financial journey.

Final Note

The article already explained to you the essence of knowing the different stages of investing in properties and how they can be done. Now, you should know how to start with each one and how you can progress up to the final step. 

It is essential to be financially literate and being aware of the ups and downs of the market. Like anything else, the market is not always at an all-time high, and you must understand that this phase is just average. It is why you have to be able to discern your next move, and you can always hire a group of professionals to help you if you have to.