What is swing investing? If you are learning about financial investment, especially real estate investment, you cannot ignore this concept. In the article below, Homedy Real Estate will explain in detail the concept of swing investing, what is swing investing in real estate and the invincible rules in the swing investing process in the real estate market.
1 – What is real estate “surfing” investment?
It seems that the investment term "surfing" is very familiar to real estate experts, but this is a completely new term for many people when they first approach the real estate field. In simple terms, surfing investment is a form of profitable investment, you only need to spend a certain amount of money, worth 15% of the actual value of the apartment/land to temporarily hold a place. Then, when the market starts to heat up, many people are interested in the apartment/land that you are holding, and they accept to buy them back at a price difference of several tens, even several hundreds of millions of the amount you initially spent. → Thus, in just a short time you can own a large sum of money. Compared to depositing money in the bank to earn interest, "surfing" investment is more effective.
Real estate swing trading, also known as short-term real estate investing, is understood as a form of taking advantage of profit opportunities before the fluctuations of the market. Real estate swing traders will earn profits from the price difference of the real estate they trade.
2 – Note on “surfing” real estate investment
Use financial leverage
You do not need to have 100% of apartment value to do apartment business, usually professional investors only use 50 - 70% of borrowed capital to do this business. For example, if you buy at the time of paying 30% of apartment value and sell at the time of paying 70% in advance, it means that you have 30% of equity, borrow 40% and pay off the loan in about 1 year. But the profit is calculated on 100% of apartment value. Note when using financial leverage, that is, the longer the loan period, the better (15 - 20 years); the more preferential the interest rate in the first few years, the better (in this model, it is only about 1 - 2 years to pay off), especially the penalty interest must be very goodwill because there are banks that charge heavy penalties for paying off, you should pay close attention to this.
Number and type of apartments
The larger the number of products (apartments) entering the market in the future, the higher the liquidity and growth risks. Simply put, if the urban areas you plan to buy are constantly being built with new buildings, when you resell, your main competitor will be the Investor. Of course, the selling price is decided by them, not you, and will usually be lower than expected. Therefore, your purpose is to "buy and resell", so it is best to choose apartments that are easy to sell.
Why is real estate speculation becoming the choice of many people?
This is a challenging investment method but many people still choose it because: High profits: In a short time, there can be many "waves" so investors can earn a significant income if they grasp it well. The thrill and excitement: The risk of swing trading can make investors excited and interested. Monitoring market fluctuations and seizing the right opportunity is attractive to many investors.
Real estate speculation is a risky business but is chosen by many people. With many advantages, real estate speculation brings high profits to investors. However, investors should also be careful and apply the experience AHS has just shared to avoid risks and losses!
