If you have some money to invest, then an investment property is a great way to obtain a good return. However, there are a few pitfalls to avoid, so here is a short list to get you started. Always consult a real estate agent before investing.
Do You Have Enough Money?
You should have a firm grasp on your finances before considering investing in property. Generally, an investment in property will yield good dividends but it will not make you rich overnight, so ensure you have enough funds to be able to live a good lifestyle before making your investment.
Do You Know Enough?
It may sound simple enough – have money – invest in property – get rewards, but there are a few pitfalls to avoid, so ensure you are well educated in real estate and investments before committing yourself. You don’t want to invest in a property only to find the real reason it was a steal is because of the amount of work that needs doing to bring it up to a livable standard.
What Is Your Property Plan?
There are a few ways you can make money from real estate. For example, you may choose to buy rundown houses, especially if you are gifted in being able to carry out a lot of the work yourself or have good contacts. This will allow you to make more return on your investment when you sell. Alternatively, you may be more interested in creating homes for the rental market. Whatever your choice, you need to have a plan before you start out.
Location, Location, and Location
You need to know your market and the location is key for many people. If the neighborhood is somewhere you would not feel safe living, then neither would any potential buyers or tenants. Research the area if you do not know it very well, and ensure you visit it several times, i.e. at different times of the day, before making your final decision to invest.
Should You Use A Management Company?
A real estate company can give invaluable assistance and advice around vacancy rates of a particular area, so consult them to ensure you get the best information to enable you to make an informed decision. If you choose to rent your property out to a tenant, then it is helpful to know what the turnover rate is. If you have no tenant insitu, then your investment is losing you money. You can also choose to use a management company to take care of the day-to-day issues. They will require up to 10% commission for this service, but they will also ensure your vacancy turnover is lower and will attend to repairs quickly.
Pitch The Right Rent
Do not price yourself out of the market on rental. Ensure you have a full understanding and grasp of what the market rental return is. If you price the rental too high, then you may need some time before you can secure a tenant. If you pitch the rent too low, then your investment will perform less than expected and you may find yourself with tenants that are not of a high quality.
For more information, speak to a real estate agent about your options.
