7 Things You Must Know Before Buying An Investment Property
Thursday, July 25, 2019, 6:00 AM | Leave Comment
Investing in a property isn’t just about choosing something that looks nice and hoping for the best. There’s so much research that needs to be done beforehand, from the location down to the state of the property!
Once you begin doing all the research and learning all these technical terms, it can get quite confusing.
And let me give you a little tip: You won’t even need to know ALL those things and memorize it. You just need to make sure you’re familiar with the necessities and important factors to consider before making the big purchase.
With that said, what do you need to know before investing in properties?
Read on as I show you the seven things you must know before buying an investment property!
Seven Things You Must Know Before Buying an Investment Property
Besides research, you’ll learn so many things from experience and from people’s personal advice.
Based on my investments and proper research done, these are what you NEED to know before making your own purchase:
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Don’t Let Emotions Play
I know how exciting and daunting it must feel when buying your first new home. Some of us tend to listen to our hearts over our minds because of it, which is totally understandable. It’s where you’ll live for a long time, so you had to make sure you LOVE it.
While it’s okay to let your emotions play into the purchase, don’t make it the major factor when making a final decision. This is still a business investment, so it’s wise to negotiate for a good price and look into any repairs that need to be done.
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Do a lot of Research
As I kept saying above, you need to do a lot of research and in proper quality. Not only should you weigh your many property options, but consider the other factors as well.
I recommend that you choose a property in locations that many of your target audience and clients will want to stay in. Your chosen investment should have the enticing features as well, which can help you reach the returns you need from your expenses.
It’s best to research the property and use analytical approaches from financial factors, rather than to consider things solely on your personal preferences. Again, emotions shouldn’t be part of investments, but economics.
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Give a Down payment
There would usually be a 3% down payment when purchasing your own home. However, with an investment property, you’ll need to secure at least 20% down payment. Why?
Mortgage insurance isn’t applicable for such properties. Furthermore, these properties need more down payments compared to the usual building, also with strict requirements for approval. So it’s also important to look into the expenses you have for renovation before paying the down payment.
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Calculate Your Expenses and Profit
Of course, you should be analytical and double-check all expenses and profit goals. It’s best to be extremely detailed than not at all and pay for it in the future.
You can do this by beginning with the money you have and what you need (and can) borrow before you invest. Next up, get a total of how much it takes to both purchase and renovate the property. Add in the operating costs as well.
Afterwards, consider the price you’ll list the property for, then subtract that from the expenses made. You’ll receive the rough estimate of profit you’re able to make.
While this isn’t accurate and you sometimes may NOT hit your goal profit, calculating is essential to stay safe.
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Go For Low-Cost Homes For Your First Investment
Regardless of how much money you have available, I recommend that you get low to mid-range priced home. Your first investment property shouldn’t go over $150,000, especially since you need to spend more on renovation and operation. It’s also best to stay low to be in a safe area to prevent too much loss if it happens.
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Pay All Debts First!
If you’re a new investor, you might have already considered investment loans. Because of this, it’s important to pay all previous debts off, which will look better in your portfolio when asking for loans.
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Look Into Investment Loans and Select Partners Carefully
There are many different loan options to look into and it’s best to choose wisely to prevent huge interests and better payment terms. Furthermore, choose your partners wisely, looking into business-minded people than your close friends.
Wrapping It Up
Through making the proper investments, you’ll be able to ensure that you get your money’s worth. That way, you’ve assured an investment that grows rather than stays stagnant or loses in value. Fortunately, there are great companies that offer great advice and good properties for sale such as the Pumped On Property Sunshine Coast!
I hope this article on the things to learn about before investing in properties helped you out. So don’t wait any longer and begin learning more about investments now.
If you have any questions or want to share your tips on investment, then comment below. All your thoughts are much appreciated!
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