When it comes to choosing a good investment, a property can certainly be considered one of the best ways to grow your money. With reduced volatility, tax reductions, and great control – it gives you the potential to gain financial independence and save for your future.
However, with all of that said, it’s not as straightforward as it appears. While many assume the process is rather simple, there are many steps involved. Before you can reap any significant rewards, you need to find a location that will give you a fighting chance.
Still unsure of where to begin? In this article, we are going to discuss 10 tips that will help you to find the right investment property.
1. Seek professional advice.
With so many different things to factor in when choosing an investment property, it’s important that you seek guidance from experienced professionals. Alongside helping with your search, the right team can assist with overall management.
Take a look at this Del Condominium Property Management company in Scarborough for instance. They streamline processes and use innovative software so that you can better oversee your properties.
2. Determine your investment goals.
We all have different goals when it comes to our investments. Some individuals may want a short-term property that they can flip for a profit. Others may wish for a home that helps contribute to their retirement fund.
By determining your goal and establishing your criteria it will be easier to find a property that meets your needs. The last thing you want is to choose something that isn’t suitable.
3. Research the market.
Alongside speaking to your property manager about available locations, now is the perfect time to do some of your own market research. You want to look for areas with a high demand and those with a potential for growth.
If you’re not ready to visit locations in person, there are plenty of online websites that can help you get started. From here you can narrow down the most appropriate options.
4. Look for high-return properties.
As with all investments, you want to ensure a good return. To do this, you’ll need to search for homes that have high yields and conduct a cash flow analysis.
By taking the time to calculate the building’s return on investment, you can discover if it’s worth your time and money. Don’t rush into anything – patience will help you make the best decision.
5. Assess the risks and rewards.
We already mentioned that property investments have reduced volatility, and while that is true – there are risks to everything. Before you spend any money, you need to be sure that you are aware of them.
Some of the most common include:
– Market risk – The fluctuation of property prices.
– Property risk – Damage caused by natural or unnatural threats.
– Overcapitalisation – Spending more money than required on renovations or repairs.
– Vacancies – Periods when the property is vacant (without a tenant).
You should also keep in mind that some high-reward properties come with the most risks. You must determine whether or not you are in a position to take on this uncertainty.
6. Understand required maintenance.
A critical factor to assess when buying a property is the cost of maintenance. You must understand the home’s current condition as well as any immediate repairs that are required before purchasing. Failure to do this could cause a lot of financial problems later on down the track.
Think about the amount of work and dedication you are willing to put in regarding upkeep. If you don’t want to be fixing issues regularly, you may be better off with a new build or something that has already been renovated/remodeled.
On the other hand, if you are looking to add value, you’ll need to save for the associated costs. While it may increase your earning potential later on, changes can still be expensive.
7. Remember that location is everything.
Property location is the most essential thing to consider when choosing an investment home. You’ll need to research the area where it is located and calculate its growth potential.
A house that is near amenities such as schools, hospitals, and shopping centers is highly desirable. Easy access to highways and public transport is also an added bonus that potential tenants look for.
8. Prioritise security.
Security plays a big part in finding a reliable tenant. We all want an abode that is safe to live in, and it’s your responsibility as a landlord to ensure that the property is secure.
Alongside inspecting the location for structural damage and hazards, think about picking a home where a security system can be installed. A quick search for neighborhood crime rates is also recommended.
9. Consider your target tenant.
Another tip you should follow is to set your target tenant in advance. Are you looking to rent out to students, families, or a senior individual? What type of homes do they prefer? How many people will be residing at one time?
Answering these questions will help you choose somewhere that is in high demand. It may even earn you a higher rental income as you’ll know exactly how to stand out amongst other investors.
10. Take your time.
Finally, while it’s normal to be excited about your investment journey, take your time and don’t make any rash decisions. You’re putting a lot of money on the line and you want to be smart with your choices.
Assess everything and don’t buy unless you know it’s the right time. Even waiting a few weeks will help you see things more clearly. Not to mention you’ll have a better understanding of the entire market!
Choosing the right investment property requires careful consideration. Thankfully, by following the listed advice, you can increase your chances of finding a profitable building that will yield wonderful returns for many years to come.
Just remember to do your research and don’t be afraid to seek help from others (especially professionals). All of your hard work will be worth it in the end!