The real estate market is still considered an investment channel with the potential to bring great profits. Besides the familiar forms such as “buying and reselling”, building houses for rent, buying old houses then refurbishing and selling, buying land in the suburbs, etc., there is another form that many investors tend to be all in recklessly interested – that is “swing trading”. What about “Swing Trading in Real Estate”? Is this kind of investment a great option for you? Let’s find out more with Moonka down the road.
1. The concept of Swing Trading
Swing Trading leverages the movements up and down of the market in a short period of time to make a profitable investment. This form of investment returns quick profit, quick return of capital, but it comes with a very high risk.
2. What is swing trading in Real Estate?
Unlike land or high-class real estate investment, swing trading in real estate attracts many small and retail investors to participate because the initial capital they spend is reasonable, only about 10 – 30% of the total product value is ideal enough to invest. When the real estate market starts to heat up, many people will be interested in the land that investors are holding, they will accept to buy it at a price difference that’s higher than the initial investment. Therefore, swing trading, after a short while, investors can already gain huge profits.
For example, Mr. A buys a mid-range apartment in District 9, Ho Chi Minh City when the new project is 50% built with a preferential price of only 780 million VND / unit and 15% of payment in advance which is 117 million VND and is supported for a loan for 24 months with an interest rate of 7% per year. After 2 months, when the project was about to be completed, Mr. A quickly sold this apartment for 900 million VND. It can be calculated roughly that in 2 months when deducting the bank interest, Mr. A earns about 100 million VND. Therefore, the profit rate is nearly double the initial capital after only 2 months.
Through a small example, we can see the potential and huge profits from the method of swing trading in real estate. This is the reason why many real estate investors participate in the market. From an expert’s point of view, this strategy on the one hand will help to stimulate demand and promote sales, creating a domino effect, helping to increase the success of the project and make the market better.
3. Experience in Real estate swing trading
Firstly, investors need to choose a reputable investor to ensure a safe investment process. It is best to choose projects with reputable, reliable investors, with solid financial resources. Clearly research and understand the history of the projects that have been built so that you can have an accurate assessment of the progress of that project and the comments of customers, real estate experts about those projects.
Secondly, investors need to pay attention to the project construction time. The construction phase of the project will normally be proportional to the time of capital appropriation of the investor.
In other words, the shorter the construction period, the more likely the market will change. This can lead to many risks such as unattractive projects, low liquidity. Therefore, priority should be given to choosing projects with a construction period of about 1.5 to 3 years, depending on the type of social housing, affordable, high-end or mid-range apartment projects.Thirdly, investors need to use the “financial leverage” method. In the real estate sector, this is the extension of the loan period as long as possible or the preferential interest rate in the first year.
For instance, when buying an apartment in the early stages, the payment is 30% of the apartment value. Investors only need to borrow 40% of the apartment’s total value and then sell it with 100% profit of the entire apartment. Thus, investors only need to spend 30% of the capital and borrow 40%, then sell and pay off the loan. The rest is the profit earned.
Fourth, investors should not spread their investments to avoid risk, instead, focus on 1 or 2 projects that are feasible and are interested and noticed by many people. In this way, investors will limit the risk of burying capital and the burden of buying costs. Moreover, investors should also choose the right segment and carefully calculate the current financial capacity of the company. to avoid unpaid debt.
Fifth, investors need to choose the right time to sell. Depending on different projects, there are different selling times, but it is recommended to sell at the time before the project is topped off or is about to be handed over, or shortly after the handover.
Sixth, investors should learn about the legality of the real estate they want to invest. Whether the real estate has had a book or how long the project owner applied for a book, whether it is agricultural land or residential, when the project owner can apply for residential. In addition, investors also check the planning map to assess the added value of the product.In addition, there are many sophisticated forms of fraud such as fake books, non-governmental real estate, and the contracting unit is an intermediary. Therefore, investors need to be careful in every procedure to manage risks or dispute risk.
Senveth, avoid buying common land. If you buy land and use the same book, then there will be a dispute later on, you will face many problems, such as facing problems such as: splitting the book is not enough to divide according to the law, there are people are not satisfied, and especially if you buy together, you may not be able to locate the land.
Eight, make sure your account in management range. If it is the land, you can balance the fences, masts to protect the property well. If you are not confident and experienced in the industry, choose real estate in the city or near the city you live to manage. Since you do not exclude the case of land breaks, using the land from the “neighbors”.
And that is some helpful information and experience about swing trading in real estate. Wish all of Moonka’s beloved investors success and wisdom in your investments!
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