Even though the property market has experienced many lows over the last few years, investing in property remains one to the best ways to invest your money and could provide a good nest egg for when you retire. Investing in property, however, isn’t something that should be entered into lightly. Read about the common pitfalls of investing in a property below and safeguard your investment to provide for your future.
Choosing a risky property or area
You may be looking to buy a certain property or a property in a certain area because it’s cheap or is considered to be ‘up and coming,’ but this may not be the wisest move. Banks may be reluctant to lend to someone who is looking to invest in what is considered a ‘high risk’ area, which could make it difficult to move forward with the investment. Make sure you choose the best investment property for you and do your research carefully.
Paying over the odds
Just like buying your first home, investing in a property that is above your price range could lead to financial difficulty and is not recommended for an investment property. If you fail to rent out the property immediately or there ends up being a number of unexpected repairs and modifications, you could find yourself in trouble from the beginning.
Not using a property management company
Between managing your own home and juggling your job and family life, managing a second property can be stressful and time-consuming. If you use the services of a property management company, however, you can benefit from the income of your property without the hassle of managing it daily. A property management company will have all the tools and resources necessary for you to feel confident they’re the right people for the job, and the associated fees are minimal compared to the peace of mind you’ll get not having to worry about the property yourself.
Not vetting tenants carefully
The right tenant can be a dream, but the wrong one will be a living nightmare. Even if you’re trying to avoid paying various fees for vetting and carrying out other checks on your tenants, they could be extremely valuable if compared with the cost a bad tenant can incur. Carry out a thorough background check which includes a credit history and reference check, as doing so could highlight issues even the most charming would-be renter could hide. Don’t be afraid to say no to someone whose background doesn’t come back as you’d like it; it’s better to hold out for someone trustworthy and financially sound, rather than rushing to get a tenant who may end up costing you money instead
Investing in property is a great way to add to your financial assets, especially if you’ve come into money recently and would like a longer term investment. Investing an inheritance in property is a good way to provide for your future as well as your family’s, and you may find that you’re able to grow it through investing in further properties down the line. Investing in property can be a tough one to start off with, but the rewards you could receive will make it worth it.
