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By: Robert Adelman1

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Australia has seen growth both in terms of population and the standard of living; this means the demand for real estate is rapidly increasing. Real estate investors have made millions investing in the Australian real estate market. A person can choose to be a passive real estate investor and just wait for the right time to sell or one can choose to invest in property, develop it and once the value is right, sell the property for a profit (this is what billionaires like Donald Trump do).
There are two real estate investing terms that are commonly used in the US and are now common the world over, the first term is ‘Flipping‘. Flipping basically means buying and selling properties in a short duration of time. A real estate investor buys properties and holds on to them for a short period of time, the moment prices go up or at the first sign of profit, the investor sells the properties, there is no development of properties involved and the only objective is making a quick profit. Flipping requires considerable understanding of the real estate market as one has to be confident of selling the property at a profit in a limited period of time. Flipping does require liquid cash, but there is no long term investment, a person can quite literally buy one day and sell the next.
A diametrically opposite approach to flipping is speculating. Real estate speculators (much like stock exchange speculators) are investors that buy properties and then hold on to them. A speculator’s objective is not immediate gain and it can take many years before a real estate investor sees profits on real estate he is ‘speculating’ about. With commercial loans becoming much simpler to get and with the lowering of interest rates, the number of speculators has increased over a period of time. Also, speculators can choose to invest further in their real estate and improve its value by making improvements. However, it is not always necessary to make improvements to the property if one is speculating.
To put it in perspective, let’s say a real estate investor buys an old house for $50,000. Flipping would mean selling the house at a profit at the first opportune moment for $55,000. In contrast, a true real estate developer would buy the house for $50,000, spend an additional $10,000 in improvements and then wait to sell the property for a much larger profit, however this might mean the speculator will hold on to the property for years, but the profit margin involved will be much higher.
Which method is right for you?
If you do not want to invest too much money in real estate or you want to build up your capital slowly then the best option is flipping. The downside of flipping is that it requires considerable know how of the market to know which property’s value will appreciate in the immediate future. If you are looking to make long term investments then choose to speculate.
Choosing the right market
Experienced real estate investors will tell you that there is no such thing as the perfect market. Markets keep fluctuation from time to time, and it takes considerable research to find a market that will grow in the future. Even dead markets can sometimes yield profit, for example if you choose to buy land for $500,000 and then make a profit of 2 cents for every dollar you would have made a profit of $10,000. In fact, a common method of flipping involves investing in dead markets and making money every time there is even a small rise in prices. A word of caution, it is important to look at market trends before investing in dead markets. To make any money in real estate investing you have to keep a sharp lookout for potential properties.
Resource Box
www.unrealproperty.com.au is one of the leading internet resources on real estate investment and purchasing.

Article Source: http://depositarticles.com/

Robert Adelman is the author of this article on Investment Property Melbourne. Find more information about Property Investment Melbourne here.

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