Investing in property is no small decision. There are all sorts of things that you need to consider before doing so. But investing in real estate has always been, and still is, one of the most popular forms of investment for people to make. It’s about more than merely investing in a home. It’s about making long term profit. Here are a few things that you should always consider before letting yourself into a real estate investment plan.
What Kind Of Property Do You Want To Invest In?
Before investing in a property, you need to bear in mind what you can realistically afford. Once you have got a budget, you can start browsing the market. Recreational real estate can involve all sorts of properties. So which do you want to go for? Here are some of the basic types and their pros.
Basic Rental Properties
Letting out basic rental properties has been a thing since the dawn of land ownership. It involves purchasing a property and renting it out to another individual. You will become known as the “landlord” and they will become the “tenant”. As the landlord, you will be responsible for keeping the home in good living condition and paying the mortgage and taxes on the property. Ideally, you will charge the tenant enough rent to cover all of the aforementioned costs. You might want to charge more than this to make a monthly profit. But a better idea is to be patient and only charge the necessary costs until the mortgage is cleared. After this point, all of the rent charged will be pure profit.
Potential problems with basic rental properties mainly lie with the tenant. If you have a bad tenant, they could cause serious damage to your property and significantly reduce its value. A (potentially worse) problem could also be that you can’t find an appropriate tenant at all. This would leave the property empty and you forking out all of the charges for something that you do not personally use.
Alternatively, you could let commercial properties. This is when you let a property to an individual or a company for commercial use. Your property may act as an office, a bar, a restaurant or a store. There are a few things to consider before purchasing a commercial property to let.
You should consider the location. Is it in a place that will draw enough business to cover the rent you would expect. Is it close to transport links and amenities?
Check out the past and recent market trends of similar properties in the area. Are a lot of similar businesses and companies closing down or are they thriving? The better the reception, the more property rent you can expect to charge.
Does the property have any additional features? Are there any features that you can add personally to create more interest in your property?
Bear in mind the size and condition of your property. This will determine who will want to rent it and how much profit you can make.