Property investment can be a really fun thing to do if you do it right. Try being resourceful, look for tips and tricks, look the facts up and make confident and educated decisions. Here are some of the best tips considering the acquirement of an investment property.
Location
This is always a huge deal. It’s even more important than the quality of the very building, and it comes very logically when you think of it. You can easily repair a damaged and old house, but a street’s or neighborhood’s reputation is next to impossible to correct. So even if it looks weird at first glance, take special care about the location of the property you are buying. A good street is certainly going to attract good tenants, and also, there is less chance of being seriously affected by property slumps.
Do not over-renovate
Although a fountain in the back yard or a nice gazebo next to it sounds and looks really nice, these expensive extras can really tighten your budget, and that is the money which you cannot and, most probably, will not ever get back. Go for a simple neutral-colored paint, maybe some new carpets or drapes, and keep your renovation fees to a minimum, but still adding a certain amount of the ‘wow’ effect to your new acquisition. For example, try to avoid buying a completely new set of furniture for the bedroom if you can do with just re-painting the old bed and dressers, and maybe changing the handles on the dressers.
Avoid Flipping
To move away from risk, and knowing today’s market, aim to buy and hold onto your property. 5 years is a nice period of time to do so. This minimizes the risk and maximizes the return. If you start with buying and selling constantly, you will not only lose money on the very trades but also lose a huge amount of time (which equals money, right?) moving your stuff from place to place, when you sell them.
Aim for the long term
Long-term investments are less risky and require way less effort. They can make a nice addition to your current income, and they present a great option for small investors. Also, having time on your hands to lay low during the market lows can protect you from severe losses.
Have cash available
Aside from renovations, there is always a need for some additional cash, for example, most lenders will require a 20% deposit on a property. So, a kind of emergency fund for such occasions is a plus to have, if not even a necessity.
Calculate the real cost of ownership
This involves everything from the very price, to mortgage rates, utilities, maintenance, repairs, and any other emergency that may pop up while you own and manage a property. The only way to keep things in check is to keep track of every single dollar spent on the property so that you can accurately circle out the final cost of everything that needed to be done.
See the property for what it CAN be
Judging the property by its current state is a common mistake made by new, “green” investors. If you use just a tiny bit of imagination you can do all the renovations and adaptations in your head and imagine what can come out of this ragged old shack you are looking at. Just be careful with the extent of renovations planned, they can mess with your profit.
Hire quality workers
With the rise of the countries in transition, like Eastern Europe, of parts of Africa, comes the serious affordability of actually well-trained workers, who are dying to work abroad. Of course, finding out what stuff you can do yourself, but leave the tricky things to the professionals.
Know your rights as a landlord
Learn everything you need to know about your legal rights and obligations as a landlord. Not knowing these may prove costly in the future.
Enjoy the benefits of your investment
After all of the renovations and consultancies, it is now time to enjoy your investment. Having regular tenants gives you a stable monthly income and, also, a sense of security a human being needs to feel happy. In the end, learn from every investment you make, and soon you’ll be a property investment mogul. Well, maybe not, but you’ll surely enjoy life with a regular monthly income, almost without lifting a finger.
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