It’s no secret that property investment has produced some of the world’s wealthiest people, so if you can afford to get in on that, why wouldn’t you? It’s also a well known fact that real estate is one of the safest investments you can make – and you’re likely to be able to grow an income off it in time too. Being a landlord, however, does not come without its responsibilities, and there are some things you should really be aware of before taking the leap and making a big decision.
If you’re considering investing in a rental property, here are some top tips that’ll help you along the way.
Make Sure You’re Clued up on the Market
When it comes to being an investor, you have to be clued up on the market in order to be successful. The property market is fluid and ever changing, so it’s a constant stream of researching and making sure you’re up to date with the latest developments. For example, did you know how social media is changing the property market all of the time? All of these things are useful to know, and use in your own experiences too.
The top and bottom of it, is that it’s important to know what’s going on with the property market at any given time in order to charge appropriately for your rental property, and advertise in the right way.
Is it Actually for You?
Being a property investor might sound like an easy way of making money without lifting a finger, and although you’ll have undoubtedly heard many a success story about it, there is actually a lot of work involved.
As a landlord, you’re solely responsible for any issues that may arise in the property, and if anything goes wrong with appliances, you’re likely to get a phone call from your tenant any time of the day or night. Say the toilet is blocked, or the drywall needs repaired – do you have the capabilities to fix these things, and furthermore, would you want to? If the answer is no, then being a landlord might not be for you.
You could always ring a professional to do it for you, of course, but the problem with this is it starts to eat into any income you’re making from the rental property in the first place, so can seem counter-productive. Basically, you’ll either have to get handy, or sacrifice some earnings. The choice is yours.
Pay Off Your Debts BEFORE Investing
It’s important that you start off with as clean a slate as possible, which is why it’s always a good idea to pay off your debts before you go into property investment.
For example, if you have a student loan you’re currently paying off, or are in a fair amount of credit card debt, then making an investment this size might not be the right move for you. Unless the income you’re going to make from the investment is going to amount to a higher figure than the debt you owe, it’s never a good idea. This is something you need to work out before you plunge into the deep end.
Keep an Eye Out for High Interest Rates
Sure, they might be low at present, but interest rates are subject to change, which is something we’re all too aware of.
Whilst the cost of borrowing money for a rental property might seem fairly cheap right now, it’s important to remember that interest on an investment property tends to be a lot higher than interest on a traditional mortgage. With that in mind, you want to ensure you don’t overspend and therefore end up unable to make back the funds to pay the mortgage on the rental property. If you’re concerned about the upkeep of this, think modestly. It’s better to go smaller than bigger in this circumstance.
Avoid Fixer Uppers
Last but certainly not least, avoid buying a fixer upper as an investment property at all costs.
Yes, it might be tempting in the initial stages to get a bargain property and do it out, but in the long term it’s not as financially viable if it’s your first investment property. Unless you’re in the contracting trade and can therefore do all of the improvement work yourself, the amount you’ll have to spend on fixing up the property will probably end up a higher figure than if you’d simply bought a more expensive property that was in good condition in the first place. Sometimes, thinking ahead is the most sensible thing to do.