Investing in real estate is not commonly viewed as a get rich quick scheme. Purchasers usually have to pay the stamp duty and loan set up fees at the time of purchase and then there is interest on the loan and other costs involved with the property need to be accounted for such as rates and taxes and general maintenance and upkeep.
A more recent indication of this could be drawn from the introduction of 40 year loan terms which could very well help investors leverage further into the market by minimising loan repayment amounts as the loan term is lengthened.
Over time the rental income can help meet the repayments on an investment property then there may be other taxation deductions available such as depreciation on the property, interest paid deductions etc. Many property investors look to achieving a capital gain in the actual value of the property over time as well.
There is no one on this planet who has yet owned up to being able to guarantee what the future holds especially in relation to the future of property values. Many property investors and market analysts look at historical trends and current economical environments in an attempt to predict where property values may increase or decrease.
History demonstrates a trend in real estate of steady increases in value over time with occasional peaks in growth of actual values often followed by a slowdown or even slight decline in growth for a term following a peak.
Experts often suggest that investors may be able to insulate themselves partially from the effects of a market slowdown by choosing investment properties that are located in areas of constant higher demand such as close to CBD business centres or shopping centres, schools, universities, water/views, transport and public infrastructure. There are no guarantees though and there is no black and white formula. Some investors use a buyers agent to locate a property for them while others prefer to research and locate properties themselves.
A common term used among property investors is "leverage". What an investor is referring to by this is purchasing investment property with borrowings at the maximum loan to value ratio they are able to. As the values of the properties they have purchased increases they use the equity gained to secure additional funds to purchase additional property further leveraging their exposure into the market thus hopefully gaining a greater equity gain at times that property values rise. The risk investors take here is if property values stall or decline at all the investor may find they are holding property which has more debt owing than may be recouped from a sale of the properties at current market values.
Leveraging into a property investment portfolio is often approached as a longer term project by most investors, taking care that sufficient equity has been gained in existing properties before moving on and acquiring additional investment properties. Many property investors formulate a plan, often with the assistance of an accountant or financial planner, as to how the properties are going to be best maximised for investment purposes to suit their individual requirements and also how any capital gain will be distributed effectively if ever an investment property is sold for a profit.
Property investors can often benefit from the services of a finance broker who can help with structuring finance and securities to best meet with their plans and a finance broker is often better equipped to "shop their requirements around" to find the lender and actual lenders finance products that come closest to meeting the investors needs.