Investing in property can be lucrative, especially
when done right. But it’s not as easy as one might think. Some people do something along the lines of buying, renovating, and then selling the property. There are also those that buy property and have other people rent out the property. These properties range from a home in the suburb to a commercial space downtown.
When you think about buying an investment property, it should be about increasing your wealth and securing your financial future so you have to think long term here.
Getting started – being financially prepared
First, there’s no easy way to get started on buying your first investment property. It’s even difficult to acquire a second investment property. In order for you to get started, you need to be financially prepared. But how do you become financially prepared? You may want to start with the banks or other lending institutions. However, you need to be financially attractive to lenders, so to speak. You need to have good income, good credit records, and a good reputation overall.
Choosing the right property at the right price
In order for you to maximize your investment, you need to get the right property for the right price. Overpaying is going to be very counter-productive because you’ll get your ROI late. But things are not so easy with real estate pricing. You have to go with not the current value of the property but its potential for increase. You need to get a property that’s more likely to increase
in value the longer you own it as supposed to buying a property for a higher price now and expecting it to remain the same price in the future. Real estate agents like me can always help you pick the property that you can invest on.
Understand the market and the dynamics
Within your area, you need to understand the current market and its dynamics. The dynamic of which side of the street is more superior is one of the many facets of the market that you will need to understand.
Using the equity from another property
You can use the equity from your home as leverage, or equity from another permanent investment if you want to purchase an investment property. Equity is defined as the amount of money in your home that you actually own. This is calculated by computing for the difference between your property’s value and your mortgage. If your home is valued at $500,000 and the mortgage is somewhere around $250,000 then your equity should be around $250,000. You can use your equity to borrow more money against your investment property. This will also increase your tax deductions.
Pick the best property manager
A property manager is usually a licensed real estate agent that acts a middleman or woman between you and the tenant. Their job is to make sure that everything is all good with your property and the tenant. He or she will also be giving you sound advice from time to time on how you can increase the value of your property and also when the right time to increase the rent is.
Any real estate agent will know the dynamics of the real estate market in your local area. If you want to know more about investments, try getting in touch with davenport laroche investments.