Which Investment Property Is Right for You?

When you first entertained the concept of investing in a property, you probably didn’t imagine there would be so many choices to make and factors to consider. From arranging an investment loan to researching locations, making sure you invest wisely is a challenge, but it is one that often pays off – and pays off well – when done properly.

One of the most important decisions you’re facing is choosing the actual property. Your final selection will play a part in the success of your investment, influence the kind of tenants you rent to, and could even determine where you live in the future. This isn’t something to be taken lightly. Here are three key questions to pose to yourself when tossing up your options.

What Can You Afford?

Image Courtesy of Stuart Miles at FreeDigitalPhotos.net

Image Courtesy of Stuart Miles at FreeDigitalPhotos.net

Yes, unless you’ve just won the lottery or have been saving for an incredibly long time for this, you’ll be using a loan to purchase your investment property. But, whether you get your investment loan from a well-established organisation like BOQ or a lesser-known lending company from your neighbourhood, this loan doesn’t give you free rein over the properties that are viable for you to invest in.

How much of your savings can you dedicate to a deposit? How many years do you really want this large debt hanging over your head? Consider your current circumstances and try to envision the future of your finances while determining the price bracket your ideal investment property would fit in to.

Where Is It Located?

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Many investors like to choose properties in their own city. This does present the benefit of allowing you to keep an eye on how things are going, plus you’ll have local knowledge of the area to help you make an informed decision. On the other hand, close proximity to your investment property could feel stifling or even restrictive. A benefit of investing elsewhere is that you’ve opened up an opportunity to easily move to a new place should doing so become desirable or convenient.

Other locations may also prove more lucrative than your own neighbourhood, depending on the relevant market trends and the demand for accommodation in the area. For example, a town with an older average population might not present a great deal of potential leasers, while a city with several universities is likely to see fierce competition for rental properties. Plus, with a credible property manager, you should be able to relax with the knowledge that your investment is in good hands, even if you can’t check in yourself.

What Kind of Tenants Would You Like?

Jeroen van Oostrom at FreeDigitalPhotos.net

Jeroen van Oostrom at FreeDigitalPhotos.net

The answer to this is obviously the most reliable and trustworthy tenants that apply, right? Well, to ensure that you’re attracting the ideal tenants to your property, it’s important to choose a place that comes with the features that these people will find appealing. Sure, some of these features – such as security and landscaping – can be added after the purchase. Others, however, can be more difficult or even impossible to provide in hindsight, and these could include a nice view, ample storage space, and parking spaces. If you want the best possible people accommodating your property, you need it to be the best possible property.

Also consider the specific type of people you’d be most comfortable entrusting your property’s wellbeing to. If you’re a family-oriented individual and would like to give another family a home, consider a house in the suburbs. If you feel a young professional would be the ideal candidate, lean towards an inner-city apartment.

Unsurprisingly, the right investment property for you ultimately comes down to you. The types of property you like, the types of people you trust, and your own financial circumstances – these personal factors and others will likely be reflected by your final choice. Carefully considering the questions raised above should lead you towards making the right decision.

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Five Things to Do Before Investing in Property

Investing in property can be quite an exciting time if you’re ready for it. The process does not have to be too difficult if you’ve done all of your homework. Investing can significantly enhance your finance portfolio, andthe best investors are those who understand the market and where they can fit into it. Here are a few tips to think about before you get started.

investing in property

1. Do Your Homework

Know what to invest in and what the current market is like. Take everything into consideration,including location, type of property, and value. By doing your homework and understanding as much about the market and your needs as possible, you will save yourself time and energy in the long run. Consider the pros and cons of every option that is available to you. Who are you looking to rent to? What types of amenities will they be interested in? Knowing the answers before you begin your investment journey is an important first step.

2. Study Your Finances

investment property
Investing in a property is a long-term commitment that might not provide any returns for quite some time. Look at your finances and consider your options. Maintaining and servicing a loan on an investment property could be relatively inexpensive because you are receiving rental payments. But, even so, you want to make sure you are financially stable in your accounts so that you do not have to sell your rental property before you are ready. Develop a budget so that you can effectively balance your income with your expenses.

3. Do a Property Check

Many companies offer property checks prior to any investment. These checks can provide information on a particular parcel of land, such as land titles, contaminated land, and current ownerships to name a few. Companies like GlobalX offer property checks that are useful if you are considering purchasing a plot of land or if you are researching a property to purchase in a particular area.

4. Create a Plan

Creating a plan includes both financial knowledge and market knowledge. Sit down and map out both long-term and short-term strategies so you will be ready to take the investment leap. Investing in property must be a long-term commitment, so make sure you can afford to commit to a property for quite a while. Set up a plan that includes a benchmark financial position, market research, and personal preferences. Decide what goals you want to achieve by investing in a property and develop steps in your plan that will help you reach them.

5. Be Ready

investing in property

Once you have created your plan, done your research, and achieved financial stability,look at other aspects of your life and decide whether you are able to take on the responsibility of an investment property and all that it entails. While being a landlord to tenants might be a hands-off role, owning and maintaining a property is still a full-time consideration.

What lessons have you learned while preparing to invest in property? Have any tips you could share with other prospective property investors? Leave your comments below.

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