Property investment has seen an explosion in recent years. It is almost certain that you will know someone who owns property and is renting it out. Many people expect to make a fortune from the property market. As with any economic endeavor success is only possible through planning and hard work; this is not something to attempt on a whim. The following will ensure you follow the right path for success:
1. Property type
Before any search can begin you will need to decide which property type is right for you. It is possible to purchase residential housing, private houses, commercial property or even land to build on. Knowing which type interests you the most will be essential to working out a finance plan. It’s really important that you adhere to a budget; this way you will not be tempted to keep borrowing money, and your investment is an almost done deal.
Different neighborhoods attract different types of renters. Nearby amenities can dictate your tenant group and the frequency of tenant changes. Colleges and universities near your property will ensure a regular turnover of students. Houses in exclusive areas will only draw the more affluent professionals who will probably not move often. Location also relates to the amount of taxes which will be due on a property and needs to be taken into consideration.
Other variables such as nearby schools, the job market or crime rate can also affect the pool of tenants you will have available. The bigger the pool the more likely your property will not be empty. A small pool of tenants will increase the possibility of having to reduce the rent just to get tenants.
3. Number of listings in an area
It is nice to have a wide range of properties to choose from. However, a large volume of properties for sale in one area can be indicative of people trying to get out of a bad neighborhood. There may be seasonal reasons for the high volume but either aspect needs investigating further to ensure it is not a bad investment. Seasonal fluctuations can have serious affects on the amount of rent received throughout the year. Equally if the area is about to experience major re-growth it could mean a good return on your investment in five to ten years. Although this may also mean that property taxes may also increase and should be taken into consideration.
4. Financial plan
You should now have decided which type of property interests you and that there is enough demand to justify your purchase. It is essential to work out how you will fund your property. Smaller properties are best to be bought either outright or with specific buy to let loans. These will require a deposit from you and the higher the deposit you can afford the better. Larger properties will often be funded by capital investors or banks. You will need to contact them and make sure your financial plans have allowed for all the costs involved. It is also important to factor in regular maintenance and to have enough reserve funds to cover emergency repairs.
5. A team
It can be essential to have a team in place to assist with all the complexities of purchasing an investment property. An agency can look after the property, source tenants and repairs and ensure regular visits are performed to check the condition of the property. But, this will add to your expenses and may not be affordable. All of this can be done by you but will take time. It will be essential to find a good financial advisor who can assist with the funding, particularly if you intend to purchase more properties in the future. Additionally you will need a lawyer for the purchase process and you may want to consult with an accountant.
There are ways people can invest in property without failing. Whether you want to buy property in Turkey or you’d rather stick to the US market, the 5 principles we mentioned above apply anyway. It’s always a good idea to consult with a professional prior to spending. This way you are sure that you’re doing what’s right and not what you think is right.
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