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Are You Getting Your Real Estate Finances Wrong?

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Investing in real estate, or simply buying a new home, is a financially complicated matter, particularly for the uninitiated. There are plenty of costs, plenty of ways to save, and plenty of factors determining whether or not you’re getting the best deal. Here, we’re going to take a look at the risk factors that might dictate whether or not you’re financially prepared for the process of investing. Fail to be thorough with your money and you could end up spending much more than you have to.

Account for the end goal

Always start with the end in mind. Why are you buying this property? If it’s primary residence, then you have to consider how much you’re willing to spend on securing the best possible home. If it’s an investment, however, then you have to make sure you’re choosing properties best suited to help you make the return you need based on the kind of investment. If you plan to make a return by selling the property later, are you accounting for any improvements or renovations you might have to make and ensuring they don’t eclipse the potential profit? If you’re hoping to let, have you been looking to buy in an area with the best rental yields? Get the most out of your investment by making sure the property, and the budget, fits the plan.

Paying the taxman

What kind of tax can you expect to pay on the property and who can you expect to pay it to? For instance, if you’re investing overseas, do you pay to your country of residence, the country the property is in, or both? Taxes can be complicated overseas so make sure you’re getting financial advice from services that operate in both countries. Otherwise, if you’re renting, figure out how much you can expect to pay on rental income tax and consider if that might change how profitable the property is. Fail to do due diligence on your taxes and you could land not only in fiscal trouble but legal trouble, too.

Get specific with your mortgage

Ensure you’re researching and finding comparisons in a broad range of mortgage providers, but make sure that your search includes those providing loans specifically for you or the kind of investment you want to make. There are services like Enness Mortgages that target overseas and high-value mortgages, for instance. If you have no idea where to start, then hiring a broker might be in your interest. As with the legal tax advice, make sure any brokers you go through operate specifically with the realms of the property you’re trying to acquire. Otherwise, you risk ending up in a loan that isn’t suited to the kind of investment you want to make, at all, and might not be sustainable.

Find the hidden costs

Depending on how experienced you are in buying property, there are some costs you might be used to. However, plenty of buyers fail to account for those costs. If they end up too high, they can throw your budget out of balance, which mean you have to buy a smaller or less lucrative property than you initially considered. The costs include hiring the agency, the property inspector, any legal advice you might need, and even translation services if you’re buying overseas. If you’re renting a property, then there are further costs like vacancy and property management expenses to go along with it. How is this all going to affect your bottom line?

Don’t make assumptions

If you’re rash in signing a deal without getting to read every bit of it, then you might not be getting the deal you think you’re getting. For instance, if you don’t seek the specifics of whether or not you’re buying the kitchen appliances along with the property, then you could end up spending more to replace them. If you don’t use services like The Building Inspectors to get a full health check-up on the property, you may also be paying more on the repairs that suddenly present themselves after you’ve already ended up with the contract signed and the property in your possession. Get every single aspect of the agreement down on paper. Don’t assume that it’s finalized until you’ve had the chance to read the agreement thoroughly.

When thinking about buying a home, make sure you do plenty of preparation beforehand. Could you find a better mortgage elsewhere? Are you choosing a property that fits your model for achieving returns? Have you considered all the costs? These can be the differences between an investment that pays off and one that pays nothing.

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