Although there are many first time buyers who are not in a financial position to buy the home of their dreams just yet, there are countless who are perfectly placed to climb onto the property ladder by buying an investment property.
A true property investor does not allow personal preferences to dictate what he should or shouldn’t buy. Such an investment is a business transaction and while the buyer may not be overly concerned with the cosmetics of the property, where it is situated is vital. Anyone who is buying a property as an investment should remember the three most important words in real estate…location, location, location.
Although the process may seem a little daunting, finding out which areas are in and which are not isn’t as difficult as it would at first appear. Although an experienced investor may well have properties located all over the country, it is wise for those just starting out to focus on owning property in and around their hometown. This is advisable for a number of reasons but perhaps the most important of all is because it will be easier for the real estate novice to gauge which areas are popular and which are less so.
Again, although experienced investors will seek out and invest in property outside their hometowns, generally speaking, they are able to do so because they have a team of experts managing their investments in their absence. Properties require maintenance and tenants require management. Although there are strict rules governing the rights of landlords, it is far easier to keep tabs on what is happening if the property is close by.
It is worth remembering that price is not everything when buying an investment property. A cheap property may well suit the landlord’s pocket, but if it is rundown or situated in an unsavoury area, the number of potential tenants in the pool may be limited. Buying a realistically price property that is in good condition (unless the buyer is willing to invest more money making the property habitable) is generally the way to go.
It often pays to think like a tenant. In other words, if you were going to rent a property, which areas and what type of property would appeal to you? Apartments in vibrant areas of larger cities are always going to be popular. The right area for a younger tenant would, for example, include a good choice of restaurants, a busy nightlife as well as shopping facilities, all in close proximity to where he lives and works. An older tenant on the other hand, may prefer quieter areas on a bus route.
As with any property transaction, it pays to do your homework before you invest. Do not make rash decisions or be pushed into signing an offer to purchase on a property that you are unsure of. As with any large investment, collect the facts, talk to as many property professionals as possible and make an informed decision based on the evidence.
Investments generally cost money initially and we are not only talking about the initial capital outlay here. Anyone buying a buy to let property should not automatically assume that the rent generated will cover all the costs. Investors view property as a long-term investment and know that it takes time for the asset to grow and accumulate wealth. However, as with most things in life, you have to spend money to make money. Property is no different, but subsidising the bond for the first couple of years will pay off handsomely in the years to come and will set the homeowner on the path to greater things.