Buying a rental property for investment has always been an individual’s favorite way to invest. A property bought for investment should be about securing your financial future as well as increasing your wealth. So the time when you start planning to invest should not make you feel overwhelmed. Here are our top 5 tips which will make your investment decision stress free.
Research tops the list!
Yes, research is the key. Before you actually step in to cut deals, you need to know about the property in and out. When it comes to investment in properties, location comes into play. Know the locality so that you can judge the future prospects. Understand what amenities the location has. Does it have schools? Who are the major employers? What drives people to visit that location? All these will help you in figuring out which is the best location. Talk to mortgage insurers and lenders; they have valuable data on different properties in various locations.
Do your math!
Investing in such properties is considered to be a long-term wealth generator. Having said that, it is recommended to consider it as a medium to long term investment type; this will help you in maintaining your mortgage repayments in the long term. You would not want to sell off your investment in a hurry. Once you have your own property, you can earn rent and get tax deduction on various expenses associated with it, helping you to keep it and service the loan easily as well. Things will get easy over a period of time.
How much will I make?
Well, a very important question to ask yourself. Know what the rental value in the locality is. Do your research on classifieds and talk to local property dealers about how much rent the other properties are getting. Know what the competition in the market is. If you see owners offering certain incentives, it might be that the rental market is soft or there’s heavy competition. If you want to earn good, look out for properties which would be low on maintenance but at the same time will fetch substantial rental income.
Pick the right type of financing mode
When it comes to financing your investment property, there are various options. Getting the right type of financing option can make a big difference. Mortgage would be your largest cash outflow, so it has to be the most thought after decision along with other costs. A good credit history will help you in getting lower interest rates. Talk to a local mortgage lender or financial advisor and chalk out the various options. Pick the right type of mortgage that suits your short term as well as long term goals.
Find a reliable property manager
We’ll all have different opinions. However, when it comes to investing in rental properties which is considered a long term investment, it is highly advisable to take the help of a property manager. These professionals can help you in keeping things in order for you as well as for your tenant. Their help can be valuable in managing your future tenants and also get the best possible values from your rental property. Don’t worry about the cost you pay to your agent; it will eventually prove to be a beneficial and cost effective decision.
At the end of the day, it’s your decision. Think twice before you take any step as buying and selling rental properties is not a day’s task. It’s your property; don’t make a deal until you are sure that it’s going to be a fruitful investment.