Property investment is a fantastic way to build an empire and have a consistent stream of income either as a primary source or on the side if you choose to keep your day job. However, while it may seem easy from the outside, the reality is much different. If you want to be a successful property investor, you must ensure you know exactly what you are doing. This guide will outline what you need to know to ensure your next investment venture pays off in more ways than one.
Know What Repairs Are Essential
In an ideal world, you wouldn’t need to carry out any repairs when buying a property. However, we don’t live in an ideal world, and even new builds can come with various issues t6hat you need to make right before you can offer the property for rent. When it comes to this, you need to decide whether you can fix these issues yourself or if you’ll need to hire a professional. If you opt for the DIY approach, consider whether you’ll have the time, whereas a professional will usually cost more, and it will depend on when they can attend to make the repairs, which could impact your workday.
Understand Additional Costs
Besides repairs, you may need to pay additional costs, such as property tax, landlord insurance or even the resale levy later on, even if it doesn’t seem that important right now. Knowing these additional costs will enable you to calculate the potential for returns, allowing you to work out a reasonable monthly cost for the property to charge tenants to help you meet the mortgage payments each month. If you’re not great with numbers, there are various online resources to explore, and accountants can also help you manage your finances with greater confidence.
Don’t Start Too Big
Starting small is vital when you first consider property investment, even if you have plenty of cash in the bank to make a substantial investment on a larger property. This is because you’ll need to deal with an extensive learning curve when owning, renting out, and eventually selling your first property. The bigger the property, the more demanding the repairs and maintenance, so you should start with a small apartment to minimize the risk. Once you’ve got to grips with the ins-and-outs of property investment, you can start looking at larger and more ambitious properties to invest in and transform into somewhere people will want to live.
Consider The Location
Location is a vital component of any property investment. For the inexperienced, picking the location can make or break your property investment dreams. The right location will appeal to more people, making it easy to rent out and even sell later on. Usually, these are properties near the subway, a university, or close to all the exciting parts of the city. Conversely, the wrong location will make it almost impossible to fill, and this can seriously impact your finances, as you never want to go more than a month at most without a tenant. While a property on the outside of the city can be cheaper, it can also be inconvenient for some tenants, so choose the location wisely.
Have A Plan
No matter who you are or what you do, you need a plan if you want to succeed and weather the storms you’re likely to face along the way. Property investment is no different, and as it’s similar to running a business, you need to know where you want to be in a year, five years, and even ten years down the line. Having a plan will help you analyze what is going well and what you need to change while also giving you an idea of your options moving forward. You’ll anticipate the market rising and falling and have an answer so you can act accordingly.
Check Out The Property
It should go without saying, but you must make sure you visit each property you plan on purchasing to ensure you know it inside and out. It’s not enough to look at pictures online. You need to be there in person. Knowing the property means you can take action when your tenants have problems, as you’ll know precisely what they are talking about. It will also help to visit the property at all times of the day and night to get an idea of noise or other disturbances.
Understand The Law
You should always know the law regarding a new business venture, so speak to a lawyer and do your research. Understanding the law will help you deal with undesirable tenants who cause severe damage to the property and use loopholes to avoid paying their deposit. The more you know, the better protected you are, which will give you the peace of mind you need. Hopefully, you never have to deal with these tenants, and everyone you allow to live in the property is respectful, but you cannot always tell.
Imagine Your Ideal Tenant
Speaking of tenants, if you know who your ideal tenant is, you’ll find it much easier to pick the right people to live at the property. This will usually depend on the type of property as well as the location. If you live in a university town, you may want to avoid anyone who looks too wild, as there’s a risk the property could get damaged. For a property in the suburbs, young families may be more desirable, as you know they won’t have the time or energy to throw parties. Even so, you should look at each application fairly and give them the chance to meet you so you can get a better idea of who they are.
Building An Empire
It is very easy to become an unsuccessful property investor, so you must ensure you understand what you are getting into if you choose to invest in apartments or houses. Otherwise, you risk losing out on your investment, which could be costly and damaging to your finances, putting you in a position that can be difficult to recover from. With this advice, you can feel confident you can manage the demands of property investment and find success.