When you have saved enough money, investing in property is a great idea. Property investments have always paid lucrative returns and made many people millionaire. However, as you are required to make huge investments, you definitely need to be extra careful. Any and every investment in property does not promise good return. Buying the right property at the right time and at right price are crucial aspects of buying a property. Here are some tips that will arm you with the needed information and help you make a killing out of your property investment.
If you are first time buyer you need to make little more efforts when entering the property investment market. Read as much as you can about the real estate market by reading books, magazines, blogs and joining forums that discusses the latest trends in the business. This will help you gain understanding of the business and how to succeed.
Buy at the Right Price
To make the most out of your property investment you need to buy at the right price. Don’t invest in an area you are unfamiliar with especially if you are approached by hard selling real estate marketers. If you are unsure of the price, consult a few property agents to get an idea. Also, check into the kind of property you should invest in. A vacant plot may not yield rental income but it has a great potential to generate good returns. If you are buying a property close to a university, bedrooms will be more in demand than homes with backyard where children can play. And, if you are planning to buy a home, it is a good idea to invest in a property that is close to schools and parks.
Calculate the Operating Expenses
Before you plunge into property investment business you need to get your Maths right. Understand that you would need at least 20% down payment. Then you need to calculate if you can afford to pay the high interest rate that applies on the investment property. You also need to take into account the annual maintenance cost of the property. Insurance, property taxes, and regular monthly expenses such as cleaning, repair, landscaping and pest control etc are other recurring expenses. Also, keep in mind that buying property is a long term investment so you would need to hold the property and bear its cost for years. So, ensure your financial stability before you buy the property.
Know How You Will Finance the Property
If you have the entire asking price, it is better to pay lump sum so you can avoid dealing with mortgages and bank loan. In case, you do not have enough or you don’t want to part with your cash, you can pay down-payment and take mortgage to make the remaining investment. However, make sure to choose your mortgage carefully.
Don’t Buy a Fixer Upper
You may be tempted to buy a fixer-upper thinking that you may get a good bargain and can easily turn it into a profitable rental. But if this is your first investment in property, buying a fixer-upper is definitely not recommended. If you really want to go for it, buy it only if you know of a good contractor who could make it good for you at a low price or if you yourself are skilled at carrying out large-scale home improvement project.
Make the Property Attractive for Renters
Once you have bought the property, make all efforts to turn it suitable for renters. Get any repair work done, paint the house in neutral tones and give a makeover to the yard. Ensure bathroom and kitchen are in working condition and look nice at a glance.
Look for a Property Manager
Being a landlord is not easy and demands a lot of your time and attention. You would need to look for tenants, collect rent and look after the repair and maintenance needs of the property. If you find this taxing it is better to hire a property manager. The property manager will take a part of the rent however it would make your life lot easier.
In short, when buying a property you need to take a cautious approach and have a long term approach. Keep realistic expectations from your investment and ensure your financial stability before you park your savings in a property. While property has historically shown to yield massive returns but a wrong decision can make your investment a waste. First time investors should particularly make a decision after thinking of all the parameters. It is also advisable to work with a partner when buying your first investment property.