If you realize that potential money is in investing in a property, you are on the right track. Still, if you are a beginner when it comes to buying properties, you may want to wait a bit. First, you need to know what tricks to use in order to make a good deal. Otherwise, you'll find yourself owning a bad property and in a debt. Check out these suggestions before you spend your money.
1. Pay Your Down Debt
Experienced investors may invest in a new property even if they have a debt, but an average buyer shouldn't do it. In case you have unpaid medical bills or a student loan, you shouldn't spend your money on a new property. Still, if the return from the real estate is bigger than your debt, then it's not necessary to pay off the debt first. It's your calculation to make. You should always have backup money in case something goes wrong.
2. Be Ready for the Down Payment
In most cases, investment properties require you to make a large down payment. You probably had to put down a 3% down payment on your home, but an investment property is another story. You will probably be expected to put down at least 20%. So, make sure you have that money before you get excited about the purchase.
3. Forget About the Bargains
If you come across a property that's a true bargain, it's cheap for a good reason. The estate probably needs a lot of renovation and repairs. It will probably cost you a lot of additional money to invest in repairs. In the long run, you won’t make a good deal for yourself. You will only lose more. The best option is if you can find a property where it's possible to add a bedroom. It will instantly raise the value and it will probably pay off in a month or two if you rent it out by room.
4. Find a Simple construction
Even though some villas and old houses look stunning and attractive, that's not what you need. You should aim at a simple and solid construction where everything is easily accessible. That way, it will be an easy property to maintain. In short, the shape of the property will tell you how difficult it is to maintain. The simpler the form - the easier the maintenance is. Of course, you need to pay attention to other things. For example, the heating, cooling, electrical and plumbing systems should also be accessible. If everything is simple and clean regarding the features, it will be easier for a property conveyancer to close the deal. It will save you a lot of headache during the purchase process and afterwards.
5. Pay Attention to Interest Rates
Even if the price of borrowing money is cheap at the moment, there are other things to watch out for. In the majority of cases, the interest rate of an investment property is higher than you expect. In other words, it's higher than a usual interest rate for a mortgage. What you need is a low mortgage payment that won't destroy your monthly profit.
6. Mind the Location
If you want the property to be profitable, then pay attention to its location. The neighborhood is very important to many potential tenants. The vicinity of schools, supermarkets and bus stops are also important factors. Low crime rates and a growing job market may also be a strong motivator for a tenant. Look at the property like you would look at it as if you would live there.
Whatever you do, don't rush the decisions. Ask for professional advice and make sure you have covered all the angles. The more thorough you are, the lesser chances there are for a mistake.
About the Author: Hannah Thomas is an expert in business innovation and management with a love for writing. She is always eager to learn new things and to share the knowledge she acquired along the way.