A Starter’s Guide to Property Investment in 2020
Sunday, August 9, 2020, 6:00 AM | Leave Comment
Many financial experts agree that property investment is one of the best ways to build personal wealth.
While you need to learn some important principles and how-to techniques for investing in properties for rehab and resale or rental, the learning curve is not overly steep for someone who is truly interested in this type of investment at present.
Here are some tips to keep in mind.
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Plan Your Financial Strategy
With a strong credit score and a healthy balance income-to-debt ratio, you may be eligible for a mortgage loan on an investment property. You will probably have to pay a higher down payment than you would for a residential property.
You can also apply for investment property loans that may differ from a mortgage loan, although the property will still serve as collateral unless you use existing equity in your personal home. Compare available options to get the best interest rate and repayment terms, especially if you plan to keep the property for several years.
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Choose a Suitable Property
Although your financial eligibility will apply certain limits to the price of a property you want to purchase, look for suitable houses, condos, or apartment units that fit your investment plans within your investment budget. Whether you plan to rehab or rent out a house, you will be responsible for the mortgage, property taxes, homeowner’s insurance coverage, and utilities as well as repairs or updates.
Don’t overspend your budget to buy a property that you will ultimately have to sell because you cannot afford it. Make sure the property you buy has the potential to sell readily when you put it on the market or attract renters if that is your plan. You don’t want a home that is going to sit empty for a long stretch.
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Build Your Team
It’s possible that you will handle the purchase and renovations yourself or rent the property to others as an owner-manager. However, if you are busy with your job or other responsibilities, you may want to select a few individuals who can help you to complete the improvements or oversee the tenants and collect rent for a small percentage of the rental fee.
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Establish a Timeline
Decide in advance how soon you want to fix up the property and resell it or have it move-in ready for renters. Organize your repairs on a schedule with an end-date in mind to avoid delaying the property preparation, which will cost you money in the long run.
Property investment is both exciting and challenging. Arm yourself with knowledge before buying your first property and follow a plan to reach your goals in a timely manner.
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