Buying an Investment Property
Things to Consider When Buying an Investment Property
Buying an Investment Property: Introduction
Buying an investment property may seem like a daunting and difficult task. However, provided you do plenty or research and have a little bit of luck, you can make a lot of money out of property investments. Of course, there is some risk involved as there is in any investment opportunity. This Hub Page will take you through some of the things you must consider before buying an investment property.
First Step: Securing Finance
A lot of people who think about buying investment properties decide to go looking at property before securing finances. However, you should always visit your local bank or financial institution and talk to them about how much money you can borrow for an investment property. They will ask you all the relevant questions to determine how much you can borrow. Don't forget to ask some different banks for the best interest rates they can give you. You just might get a terrific deal if you do enough research. Of course, if you have enough money to buy the property outright you can jump straight into step 2!
Second Step: Research, Research, Research...
I've repeated it three times because this is the most important thing to consider when buying an investment property. So you now how much you can afford but where should you buy? Should you consider international properties? Or should you only look in your local state? This is why research is so important. You need to think about some of the following:
- In what areas can you afford to purchase properties?
- Where are properties predicted to increase in value over the next 5 or 10 years?
- What fees/rates/bills will I have to pay in the area I am considering buying property?
- What taxes will I have to pay if I buy property in a certain area (especially important to consider if you are purchasing an international investment property)?
- Do you want to buy a home or an apartment?
- Is the investment property close to shops, public transport and schools?
- What are rental prices like in the area?
- How much work does the property need? Does it need to be painted? Are the toilets, showers and taps working properly?
- How old is the property? Will it be in constant need of repairs?
- Has a pest inspection been done?
Third Step: Buying the Property
Once you have decided on a property you need to purchase it! This will be fairly similar to buying your own home. However, you may want to ask whether the seller would be willing to 'rent back' the property. That way, you will have income coming in straight away. Also, make sure you check all the electrics and taps in the house and have pest inspections done. You need to ensure that you won't have to pay a whole lot extra to get rid of pests or fix things that aren't working.
Fourth Step: Managing the Investment Property
This is something that you need to consider carefully. You can hire someone to manage the property for you. This is a lot less stressful but can be relatively expensive. If you only have one or two investment properties then you should be able to manage them yourself. However, if you have a large portfolio of properties then you may want to seriously consider hiring someone to manage your investment properties for a negotiated fee.
Provided you follow those four simple steps and do plenty of research you should find a very good investment property. Good luck!
Other Hub Pages on Investment Properties
- Beach Investment Property
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- The One Percent Rule for Investment Property Financing
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