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What You Need to Know Before Investing In Real Estate

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Investing money in property is a shrewd move. Stashing your hard earned cash in a bank leaves it susceptible to losing its value over time. Putting it into property means that it is more likely to hold its value, or to increase.

Therefore investing in real estate is a tempting way to generate passive income as well as securing money for the future. While there are many stories of first-time investors making big profits without any experience in the market, overnight success is the exception rather than the rule. So, as with any large investment, it pays dividends to do your homework and to follow some guidelines. Here are some tips to get you started. 

Research

Of course, you’ll need to put in some hours researching what kind of property you want to buy. This will differ a little from research you would do when buying a house or apartment to live in, as you’ll need to take into account who your target market is, look at locations in which property values tend to increase, how much market appeal it has and whether or not it will reach the expectations you have for profitability, long term.

Budget

Be realistic. Remember that you will have to outlay a significant amount of money to begin your journey into real estate investment. Know your limits and start small – find a property which is easy to maintain and manage. If you’re buying to rent then make sure you can afford to keep up the mortgage repayments if your tenant stops paying, or you find yourself without a tenant for some period of time. Also, take into account what work the property will need to make it habitable, and most importantly, profitable.

Loans

It’s likely that you’ll need a home loan to move forward with your property investment. A down payment of 20% or higher will mean you’ll avoid mortgage insurance, so budget for that to reduce monthly outgoings on top of standard repayments. Insights from popular lender comparison site Lendi shows that 21% of customers with Macquarie Bank were on a 3.69% rate over an average of 25 years, whilst in the last 12 months, loans from ING Direct have been considered 53,640 times. 

Professional Help

As with all forays into the world of property buying, it pays (eventually) to have a good, trustworthy agent on board. Remember though, this is your investment, and to make a success of it you should rely on your instincts, and use a real estate agent for guidance. You can find agents who specialize in buy-to-rent investment properties.

Pay Debts/Prepare Finances

This goes without saying whenever purchasing property – get your finances in order before you begin the process. Pay off or consolidate your loans, pay off your credit cards, pay attention to your credit score. Remember that a history of meeting payment deadlines on loans and credit cards actually contributes to a good credit score, and if you keep your credit card balance at roughly 20% of your limit (or lower) it can be beneficial.

Don’t Get Emotional

One of the best pieces of advice anyone can give you when buying a home or a property as an ongoing investment is to keep your emotions out of the decision making process. If you let your heart rule your head you are putting yourself in danger of ending up with a loss in the long run. Look at your investment as just that – an investment in the future.

Putting your money in bricks and mortar is definitely a wise move— be shrewd, be businesslike, follow these tips and take your first steps with confidence!

 

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