Property investment is a major decision that can either see you reap rich rewards or lose out on a lot of money. We read how seasoned investors are rewarded with handsome returns and, naturally, would like to get a piece of the pie. But, property investment is not as easy as how the pros make it so it's important to know how to choose properties and protect yourself against debt burden.
• Do not go over your budget. You may be tempted to invest in property that's sure to bring in money but unless you can afford it, leave it for later. First-timers, in their eagerness, tend to overspend on property which value they know little of. The only way to learn the difference between a good and bad investment is to study the real estate market. How it fluctuates, factors influencing its state and so on.
• What type of property are you interested in investing? There's residential, land, commercial and industrial property and under them you have single-family houses, apartments, restaurants, sites for factories etc. It's a long list and you want property that provides income.
A point to remember is that property which brings in money in one area may not in another. For example, single-family homes located near industrial areas may not see many takers because families are not warm to the idea of living near polluting plants.
Then again, if a factory is providing plenty of employment opportunities to people living in an area, the place could see the housing market see a rise as people flock to seek employment. What this means is that every area is different and learning real estate trends in those areas is important.
• When calculating a budget, do not factor in only the cost of the property. There are taxes to be paid which can significantly change your budget and you do not want to find yourself unable to pay off loans.
• Even experienced investors rely on professionals like property managers to give them the best value of their property. They go one further by also educating clients about property law, rights of the landlord and the tenant.
You may be the owner but this does not mean you have to take care of maintenance issues. The job can be managed by the property manager.
To avoid conflicts with tenants, always use the property manager as the middleman and under no circumstances, visit the property without giving a head's up to the tenant. You could have violated the terms of the lease agreement.
• Before purchasing property, check its conditions especially the roofing system, flooring, plumbing and heating. Dilapidated property may be available for a very cheap price but if you'll have to spend a lot on renovation, you'll be better off looking for something else.
Assessing a piece of property requires professional help which can be availed from building inspectors. Likewise, renovation work requires full knowledge of construction, plumbing and other trades that only a licensed and experienced tradesman can carry out.
• It's usually necessary to perform some renovation work even on buildings which are far from dilapidated. Areas to focus on are bathrooms and kitchens as these are the first places a buyer will check.
• Always think of the long term before investing in property. Unlike shares, you can not sell property in parts so wrong investment choices will cost you. Once you learn the basics, you should have no trouble buying and renting / selling real estate for a profit.