For a lot of people, investing is the kind of thing that’s only reserved for the extremely wealthy. The kinds of people who blow their noses with hundred dollar bills and are happy to throw around millions on the stock market. For the rest of us, it seems like the kind of thing that will only ever be limited to the realm of fantasy. But that’s simply not true! Even if that’s the way that the world of investments worked once-upon-a-time, it’s certainly not the way things are now! It’s fair to say that becoming an investor has never been easier than it is in the present day. And there’s one kind of investment that’s proven time and time again to be one of the most lucrative and reliable one’s available: property. Property is by far one of the best options for first-time investors as it often avoids some of the risk that comes with some other investments and the returns on it are often fairly reliable. The key is to make sure that your property is working for you, rather than spending all of your time trying to squeeze every possible penny out of it. Of course, this doesn’t mean that becoming a property investor is necessarily going to be easy! In fact, it’s probably going to involve a lot of hard work and some serious commitment on your part. But there are certain things that you can do to make your life easier as an investor and as a landlord. To make sure that you don’t end up with a money pit, here are a few things that you should make sure to consider when jumping into the exciting world of property investment.
The property type
One of the most important things that you can do is to be as choosy as possible when it comes to your property. It can be tempting to try and rush into to something so that you can start bringing in rent money as quickly as possible but that is one of the worst things you could possibly do. If it’s going to be a viable investment, you need to be sure that a property is right for your needs. For example, it might be tempting to find the cheapest possible property. The issue with that is that you need to take some time to understand why it’s so cheap in the first place. Most people aren’t going to sell a property below value out of the goodness of their hearts, so there will always be a reason behind the price of a property. Make sure to have the entire thing carefully inspected before you make any commitments. A cheap property might seem like the perfect investment, but if it suffers from widespread structural damage, then you’re going to end up spending far more than you ever intended on repairs. Not only that but older, let well-kept properties will often need more routine maintenance which is going to eat into both your time and money significantly over the years. If the property itself seems absolutely fine, then it’s important to scope out the area that it’s in. Different locations fetch different prices, and there’s often a reason for that. A lot of cheaper places to live have higher crime rates, are less clean, and aren’t as suitable for families or professionals. The last thing you want is to lose tenants time and time again because the neighbors are constantly blasting loud music into the early hours of the morning, or because the tenants simply don’t feel safe. A more expensive property might be a larger initial investment but you may find that, in the long run, it works out better because you don’t have to do as much work on it and it’s in an area where your tenants are able to feel as comfortable and safe as possible.
Unless you’re in the extremely enviable position of being able to pay for the property out of your own pocket, then you’re probably going to need to take out a mortgage on it. Of course, the kind of mortgage that you take out is going to have a lot of pretty serious knock-on effects on the property in the future. You need to figure out how much you want to borrow, at what interest rate and for how long. These factors all work together to help you figure out things like rental costs. One of the main tasks of the rent paid on your property is to cover the mortgage, of course, no one plans on buying and leasing a property simply to cover the cost of their initial investment. You’re going to want to set a rate of rent that will allow you to not only cover rent and maintenance costs but also help you generate profit as well. This means that a longer repayment period on the mortgage might be a good idea, but you also need to be aware of interest rates and how much you’ll be paying back overall. The whole thing is a careful balancing act that will help you figure out exactly what you need to borrow and what you need to charge in order to turn the property into a genuinely viable investment. This mortgage calculator is a great way to figure out precisely how different lending periods and interest rates will impact how much you inevitably have to pay in the end. Once you know that, you can move forward with a much clearer idea of the kinds of rent prices you’ll want to be charging.
Tenants are something that far too many property investors and potential landlords tend to forget about. Your property is just going to be something that you pointlessly pour money into if it’s not occupied and that pretty much defeats the point of an investment entirely! But it’s not just a matter of finding a tenant for your property; it’s about finding the right tenant. The right tenant can be a genuine dream come true! Your life as a landlord can be simple and easy, watching the rent money roll in as they take care of the property and only call you for important, routine maintenance that’s needed. On the other hand, the wrong tenants can turn the whole experience into a living nightmare! You could end up spending every day running back and forth to the property fixing this and that, dealing with tiny problems that the tenants should be able to handle themselves or even fixing things that the tenants cause. You can spend your days chasing them up for rent that hasn’t been paid while they dodge your calls and ignore your messages. And when they leave you could end up spending huge amounts of money on making the property even close to livable and presentable again. The best thing that you can do is to screen your tenants as carefully as possible. Make sure that you always meet with them before you agree to anything so that you can feel comfortable with them. You should also make sure to contact previous landlords in order to get as much information as possible about what kinds of tenants they have been in the past. Also, make sure that the tenancy agreement is something that both you and the tenant are happy with. The last thing you want is to find that you have to pay for something that should be the tenant’s responsibility, but they’re able to avoid it because of a loophole in the tenancy agreement. It’s also worth being aware of how long they plan on staying for. Each time a tenant moves out it can potentially result in more expenses for you so it’s a good idea to try and find tenants who are looking to occupy the space for a decent amount of time.
Even with all of this advice, property investment isn’t something that you should go into lightly. It’s by far one of the best first-time investments, but it’s also the kind of investment that requires more than a little commitment on your part. You need to be totally willing to put in the right amount of money, work and time to make it a success. This isn’t the sort of thing that you can just walk away from if you get bored of it. If you decide to invest in a property, then you’re in it for the long haul. Of course, the positive side of that is that the more time that you commit, the more experienced you become. That means that each new property you invest in will be jumping off the back of the experience and things you learned from the previous one. With a good work ethic, a keen eye for a good deal, and a little luck, you’ll have your property empire flourishing in no time!