Property can be a great way to invest your money, but only providing you do it right. If you’re buying a family home, you’ll want to ensure you get a good price and can watch the value of your property increase over time, for example. Alternatively, if you’re purchasing a rental property, you’ll need to make sure that the property will be easy to lease out to potential tenants, as well as checking that it will increase in value.
If you want to make money from property investments, there are certain things you should be aware of. To learn more, take a look at these 6 essential things to do before investing in property:
1. Check Out the Area
The area is arguably the most important factor you need to think about when you’re considering buying property. While the structure itself can be repaired, renovated, or replaced, you can’t change the area so easily. You can download a free property report here to learn more about the suburb your investment property is situated in, as well as getting useful data regarding nearby sales and purchase history. This type of information gives you an indication of what to expect in terms of growth potential and can help you to decide whether or not you’re getting a good deal.
2. Get Financing in Place
Most people who invest in real estate do so with the help of financing. You may want to take out a buy-to-let mortgage or a company loan, for example. If you’re going to be using financing to fund your investment, don’t wait until you’ve found the perfect property. By the time your financing application has been approved, you’ll find that your ideal property has been snapped up. Instead, get financing in place first and secure pre-approval from your chosen lender.
3. Identify Up and Coming Locations
Making a good return on your property investments requires a good knowledge of the local geography. Buying property in areas that are not particularly popular or well thought of could be a savvy move. If regeneration is planned, for example, or new amenities are being constructed, it could be a sign that the area is up and coming. If so, you can expect property prices to increase as the locale becomes more sought after.
4. Build a Network
Property investors often need to make modifications to a structure before it can be rented or put back on the market. You may need to rewire a building, renovate an entire home or simply redecorate, for example. If you don’t have the expertise to undertake these jobs yourself, you’re going to need a network of tradespeople. By finding professional electricians, builders, contractors, and decorators you can rely on, you can ensure that any renovation work is completed on time and within budget.
5. Get to Know Local Real Estate Agents
If you want to grab a property bargain, it pays to be on good terms with local real estate agents. They will be the first to know when a new property comes on the market. By letting them know what you’re looking for and what your budget is, you can be confident that they’ll be in touch when something that fits your criteria becomes available. There can be fierce competition when it comes to securing a sale of a potentially valuable investment property, so making friends with local real estate agents can be a good idea.
6. Consider the Tax Implications
If you rent a property to tenants or sell a home for profit, it’s highly likely you’ll have to pay tax on what you earn. Factor this into your budget from the outset, so you can get a good idea of whether a particular property is going to be a good investment. Additionally, you may want to seek advice from an accountant, tax adviser, or financial planner. How you make your investments can alter your tax liability, so modifying your arrangements could help you to save a significant amount.
Becoming a Property Investor
Anyone can become a property investor but building a valuable portfolio isn’t as easy as it sounds. Before you get started, you’ll want to learn more about the industry so you can avoid common pitfalls. Similarly, researching every potential property purchase in detail will help you to make the right decisions when it comes to investing. By getting to know the market, you can make savvier purchase decisions, buy, sell, and rent at the right times and increase your ROI.
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