1. Know your budget
Before diving into real estate investing, it’s important to have a thorough understanding of your cash flow. Also, ask your bank about pre-approving your investment loan so you know how much you can borrow before you start looking for your properties.
2. Don’t skip ongoing expenses
Make sure you have adequate budget for insurance, installments, and general repairs. If you’ve bought your perfect investment property, you know what you can do to avoid costly maintenance issues like replacing old faucets.
3. Purchase in growth area
Select an investment property in the areas where there is a strong demand for rental accommodation. Buying an asset for transportation, schools or universities will make it more attractive to renters.
4. Be practical about your investment goals
If you’re looking for long-term real estate for quick capital growth, then it’s easy to renovate and convert real estate for a quick profit. In economically weak times, it can take many years to achieve the same growth.
5. Build Sweat Equity
Paying a handyman to renovate your investment property is a costly affair. But if you’re willing to give it a go, you can increase your profit margin and save money by doing the work yourself.
6. Chase the living, but avoid the big
Note that the rental property only needs to be neat, clean and functional. Do not buy luxury goods as it has stylish decor and interior.
7. Don’t get emotional when buying
If you are looking for the house, you must buy with your head not your heart as some people could be easily overcome by emotions. While your home on the steep block might offer you mesmerizing views, excavation or maintenance costs could make it a nightmare for you to renovate. Also, make sure you understand the benefits and risks.
8. Think before negative outcomes happen
Your assets can earn negative interest if your investment loan repayments are not fully covered by the rent. While this can offer tax advantages, it can also lead to financial hardship if you don’t have sufficient cash flows to cover loan repayments. Therefore, you should carefully consider your budget before purchasing.
9. Inspect your building
Before signing a purchase contract, take the time to understand the construction report well to avoid expensive repairs. Also, the termites are one of the leading issues to watch out for.