Do you want to purchase an investment property? Real estate has created several of the world's wealthiest people. So, there are many reasons for you to think that it is a sound investment.
Experts agree that, as with every investment, it is good to remain well-versed before investing hundreds of thousands of rupees.
Below are the things you must investigate and consider before you buy a rental property.
- Buying a property to have rental income can be risky.
- Being a landlord needs a broad array of skills, which could become as diverse as knowing basic tenant law so you can fix a leaky faucet.
- Experts suggest having a financial cushion if you do not rent out the property or if the rental earnings do not cover your mortgage.
Apart from the pointers mentioned above, here are 5 other tips to consider before buying your first property.
Are you ready to be a landlord?
Do you understand your way around a toolbox? How are you at fixing unclogging or drywall a toilet? Sure, you can contact someone to do it for you or have a property manager, yet that will reduce your profits. Property owners that have one or two homes usually do their fixing to save cash.
Of course, that fluctuates when you bring in additional properties to your portfolio. If you are not a new investor and have several properties, you could put together a reliable team of cleaners, handymen, and contractors.
This is not recommended for fresh investors. However, once you get the hang of real estate investing, you need not stay local.
If you are not the handy type and do not have much spare cash, being a landlord may not be right for you.
Pay down personal debt
Savvy investors may carry debt as a part of their portfolio on investment plan. However, an average person must avoid it. If you have unpaid medical bills, student loans, or children who will go to college soon, buying a rental property may not be the right move.
Remember, remaining cautious is essential. It is unnecessary to pay down the debt if your income from real estate is more than the cost of debt. This is a calculation you should make before investing.
We recommend having a cash cushion. Do not put yourself in a state where you lack the money to pay your debt. Always have a safety margin.
Secure a down payment
Investment in residential and commercial properties usually needs a huge down payment than owner-possessed properties; they have higher stringent approval needs. The three percent you may have put down over the house where you presently live will not function for an investment property.
You will require a minimum of twenty percent down payment, given that mortgage insurance is not present on rental properties. You can obtain the down payment with bank financing, like a personal loan.
Find the right location
You do not want to be stuck with a rental property in a place that is falling rather than picking up steam or stability. A locale or city where the population is developing and a revitalization strategy underway represent a potential investment chance.
While selecting a profitable rental property, search for an area with a decent school district, less property taxes, and plenty of amenities, like parks, restaurants, malls, and movie theaters.
Additionally, a neighborhood with fewer crime rates, available public transportation, and a developing job market may mean a huge pool of potential renters.
Avoid a fixer-upper
It is tempting to search for a house to get at a bargain and turn it into a rental property. However, if this is your first property, that is probably a bad idea.
Unless you have a contractor who performs quality work on the cheap—or you are skilled at large-scale home enhancements—you likely will pay very much to renovate. Instead, search for a house that is priced below the market and requires only small repairs.
A Final Word
Become realistic with your expectations. As with every investment, rental property is not going to create a huge monthly paycheck immediately. Also, investing in the wrong property can be a catastrophic mistake.
For your initial rental property, consider working with a skilled partner. You can also rent out your own house to check your tendency to become a landlord.
If you want to rent property in Kharghar or Navi Mumbai, get in touch with us at +919820610870 or mail us at firstname.lastname@example.org.