Things to Do When Buying Your First Investment Property

by Magical Penny on August 10, 2021

When stepping into the world of property investment, you have to think beyond your preferences and prioritise the needs of your target market. The real estate industry is one of the most competitive markets out there, and you have to invest your time and money wisely if you want to make a profit. Here are five things you need to do first.

Consider the Financing Options Available

Buying an investment property is different than when buying a home. You’ll need to put your finances in order and pay off your debts first. Also, consider limited company mortgages when purchasing the property as a company. 

Consult experts in the field to understand what it entails. Additionally, carefully check the benefits that come with different financing options. 

Choose an Ideal Location

One of the first things that should come into your mind when buying an investment property is the location. Areas with high potential for development are always great choices since they offer stable rental income in the long run. 

For example, a suitable investment property should be located near schools, colleges, hospitals, office buildings, or public transport stations. It would help if you also considered how accessible the property would be for potential tenants. 

It’s always best to have quick access to main roads and highways since this will reduce the travel time for your tenants. 

Another thing that you need to think about is how accessible your property will be for renovations and repairs. You want your investment property to have a great view, but it’s also vital that no trees or other obstacles are blocking your vision.

You might have to cut down some trees if they’re obstructing important building features such as windows and doors. The cost of chopping down a tree or removing an obstacle is worth it in the long run because this will help you maximise your rental income.

Consider the Overall Cost

There’s more to think about than the actual cost of buying the property. When purchasing an investment property, you also need to consider the cost of renovations and ongoing expenses. To make sure that your rental income will be enough to cover all these costs:

  • Make some price comparisons between similar properties in the same area. Look for realistic figures for insurance, maintenance fees, and other related expenses.
  • Overall, try to estimate the total cost per month for you and your tenants.
  • Make sure that it’s within the budget of your target market before buying.

Calculate the Expected Profits and Expenses Beforehand

One of the most important things you need to do is calculate your expected profit and expenses. Determine how much rental income you can get based on current market prices in the area and how much money you will spend on renovations and repairs over time.

Include them in the estimate if there are ongoing expenses such as water, electricity, and cleaning services. Once you have an idea of income and costs based on realistic numbers, you can determine how much money you should charge for rent. 

Another essential thing to note is that it will take some time before your property earns a profit. Calculate your expected revenue stream with enough padding for unexpected problems. When you do these things right, you’ll be able to grow your property investment business gradually. 

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