Ask any seasoned property investor and they will invariably tell you that there is no better way to start investing in property than to simply “start”. Following this, you will probably get a few one-liners thrown at you. Such as:
“You can achieve financial freedom through property investment” or “It’s the best way to hedge against inflation and let your money grow” or “Never plan to afford a property tomorrow, buy today so that you can afford your dream home tomorrow”.
Now all of this is well and good, and accurate, nevertheless property investment can be a very scary thing for some – especially if it involves dipping into your life savings.
Like all good adventures, it pays to be prepared. Being equipped with the right information could be the difference between success and failure, and the more you know, the more confident you will be about taking the right steps.
As an investor, the more you learn about property investment, the more positive your experience will become.
Real estate is a great investment vehicle, because it rarely loses value, and if approached with the right mind set, it can yield very lucrative returns in the longer term. Here are some helpful tips to ensure you make smart investments.
If you are making a first-time investment, do not place your bet on the assumption that property values will go up in a particular area. This assumption can end up costing you a large sum. The most reliable investments are the ones that will give you immediate cash flow (rental). Treat the potential capital appreciation of your property as a secondary goal, and once the property value increases it will add to your income.
If you buy a property and you intend to rent it out, be wary of whom you lease it to. The individual should be able to give you money for the first month along with a deposit ahead of time. If they can’t get their money together at this time, they are likely to have problems paying rent too. Keep on looking for better tenants.
Be very patient when you are first starting out. It may take more time than usual for you to score your first deal so, don’t get nervous and put your money into something that you don’t need. Wait until the right investment for you comes along.
While you may want to diversify your portfolio with purchases all over the place, make sure you also tap into your local sources. You should start looking for good deals in your local community, because you know the landscape and the neighbourhood well. This makes it easier for you to deal with local councils and it enables you to talk up the property when negotiating with potential tenants or buyers.
If you are investing in a new locale, do your homework on the neighbourhood and its surrounding areas before you commit to buy. Location is essential to your investment, so talk to the neighbours and try to get a feel for the area.
You should not allow your investments use up your reserve fund. Investing in real estate can involve tying up large amounts of money that you can’t get back right away. Don’t invest at the expense of your day-to-day budget.
It is important to jump into the market early and learn as much as possible. You put yourself at a disadvantage if you wait too long.
Never leverage yourself out completely when trying to get that next deal. You should make the best business decisions that allow you to have available cash in your portfolio for unexpected expenses.
Always refer to the future economic forecast of a given area that you are interested in. High unemployment and a shortage of decent jobs will keep property prices down. This will have a big impact on your investment. A thriving city that is robust will surely raise a property’s value.
There will always be lows in real estate market. It is important that you do not let any lows convince you to give up. Stay resilient; remember property is a long-term game.
When making a property deal, aim for one that is the most hassle-free. Your time is money; you aren’t looking to be babysitting tenants. Avoid rentals in college towns, bad neighbourhoods, and vacation rentals. Buy properties that have a history of consistent tenants.
Investing in real estate is a smart way to ensure a great return on your initial money, but good choices must be made in order to see handsome returns.
Pocket Tips to live by
- Invest as much time in learning about the business as you do working on the business. You must budget your time wisely if you want to make good profits consistently.
- When determining strategy, know all the costs. You need to pay processing fees,stamp duty, legal fees, and quite a few other things that can increase your bottom line.
- Keep up with online blogs and investment groups to stay informed on the tricks of the trade from those who have already invested successfully. This will give you invaluable information which can be implemented in your strategy too.
- When checking out investment properties, ensure the rent collected covers all or nearly all of the mortgage payments you have every month. This will help you to move in the right direction.
- If you buy a property and you intend to rent it out, be sure to choose your tenants wisely. Prospective tenant should have enough funds to pay a deposit plus the rent for the first month.
- Understand the neighbourhood prior to making any purchasing decisions. When buying investment properties, location plays a big part.
- If you want to buy real estate, hire a property manager to handle tenants. Because you will be relying on the rent to cover your mortgage, you have to ensure that the applicant has good credit.
- Think about adding business properties to your investment goals. Commercial properties can give you long term rentals, which can be very lucrative.