When you’re making your first investment in real estate, it’s hard to know where to begin – even if you know where you want to end up! Ideally, your aim is to pay the mortgage with the income that you get from your tenants, but you have to remember that you’re going to need to invest a chunk of money into the property before you get your tenants in. Here are some tips to help you get started when you’re looking for your first investment property.
First of all, establish your budget and make sure that you don’t pick out a property that will mean you’ll be financially overstretched. Property investment can be stressful enough without having financial issues on top of that.
Be careful when you’re picking your investment property. There are a lot of factors to consider and it’s important that you make your decision carefully and that you put a lot of thought into it. First of all, you don’t necessarily need to go through an estate agent, as they might rush you into making a decision that you aren’t yet ready for. Here are some factors to consider when you’re picking your property:
– Neighborhood. This will dictate both the price of the house and the amount of income you’ll get from the rent that you charge. It will also affect how long your renters will stay in the house and how often you’ll have to replace them. If you go for a family neighborhood, chances are your renters will be saving up to buy their own property and they’ll want to stay in one place while they do so, taking care of your property and turning it into a family home.
– Schools. If you want to attract a family to live in your house, make sure that the schools in your area are good and that the crime levels are low.
– Amenities and public transport. If you’re in a city and your tenants are commuters, then chances are they’ll want to live near public transport, whether that’s a metro station or a bus stop. Make sure you emphasize that in your listing, and check out the local amenities that families might be interested in. Movie theaters, gyms and malls are great for prospective tenants.
Single family homes are best for first time investors as they are simpler to run and tend to attract more long-term renters. They’re also more likely to go for triple net properties if that’s what you want to do, as they’re more likely to want to take responsibility for their accommodation and turn it into a real home.
Finally, ensure that the property you choose has appreciation potential – that it will increase in value over time. Find a home that you can update with a few cosmetic details in an up and coming neighborhood attracting more and more young families. This will encourage your renters to pay more and it will also mean that if you choose to sell the property, the value will go up.
Becoming a property investor takes some serious bravery and will be a lot of hard work, but a little grit and a lot of determination will see you through.