Investing in a property is a great idea, but only if you do it right. On the one hand, you can profit from price escalation, and on the other, you can earn a second string of income if you give it away on rent. Recent statistics show that the property market is out of hibernation. That’s good. There are plenty of incentives for investors. Even better. So don’t hold back. Jump right in and invest in the property market right now.
Here are four important rules that help you profit the most from your investment property. Remember them when you are searching to buy a property.
Choosing the Right Investment Property
- Know what you are buying – You will first have to know your investment strategy before buying the home. Ask yourself – do you want to buy to renovate, and then sell it off quickly for a profit, or do you want to hold it long-term? Are you someone who wants to improve your cash flow or build your wealth? What you will buy will depend on what your strategy is.
- Select the right area – There are bound to be properties throughout the town, and even the suburbs. So where should you buy? It is best to select a neighborhood where there is a strong growth potential in the future. Look at historical trends. But there are other important things to consider as well, as such what’s likely to happen in the area in the next 10 years. Perhaps there has been an improvement in transport infrastructure, redevelopment, or changing demographics in some areas. So these neighborhoods could grow faster now than before. Thus, you cannot just look at the historical data.
- Select the right type of property – Traditionally, the capital growth has been higher in houses. Apartments have provided better rental returns on the other hand. Apartments are certainly giving better returns thanks to changing demographics. But that’s not true for all neighborhoods. So it’s essential to research well. High-rise apartments are good if they provide great views. Otherwise, traditionally, two or three-storey apartments give better returns.
- Knowing the target tenants – Where you buy the investment property should depend on the type of tenant you want. For instance, a young family with kids will want to stay close to good schools and parks. On the other hand, professional singles might prefer living close to shopping areas, cafes and the airport. So decide what is best for you and buy accordingly.
Also, another important factor to consider is the right time to buy your investment property. In this, you should keep looking at the interest rate. That’s because, the home mortgage rates change from time to time. Keep a close tab on the fluctuations. You should target to buy your property when the rates are low. This way, you will be able to save a lot of money. Real estate is probably the biggest investment most people will make in their lives. So it’s good to be careful.
Finally, if you want to buy the property for rental income, then remember, it’s always best to have realistic goals in mind of what you want to earn annually from your rental property. This will help you select a property that is best for you.