Serious about investing in your first rental property? Set yourself up for long-term financial gain with these top tips.
1. Buy where you know
Managing a rental can take up a serious chunk of your time (and budget), therefore, it is relatively easier to manage a property close to where you stay. Buying in the area you know will also allow you to apply your local area knowledge and determine if the property you are interested in is worth your while.
2. Do not buy in haste
Do you have money in place to finance this property? If not, what is the rush? Do your future self a big favour and make sure that what you are buying is going to generate the expected return on investment.
A hasty decision can cost you down the line. So, shop around and compare properties because it will give you a fair understanding of the market and help you to identify opportunities.
3. Research Research Research
You need to think carefully about your intended property investment. Conduct as much research as you can before you view the property. Check if all your facts and figures are correct.
We are all aware that property prices have risen a lot, and this means that the returns that you will be able to achieve are not as good as they were. What will you do if the property does not produce positive cash flow initially? Give yourself the financial ability to subsidise your investment if need be.
4. Calculate your risk
It is easy to get caught up in the excitement of buying your first investment property, but it is integral that you ensure that you do not get into financial difficulty.
The amount you apply for at the bank is called the level of gearing. And the higher the level of gearing – you guessed it – the greater the risk of financial troubles should you lose your tenant of if interest rates go up.
5. Take it slow
If you are looking to get rich quick – the property investment game is not for you. It requires long-term planning.
You also don’t want to sell your property anytime soon because the various costs can consume a massive portion of your profits. A smart idea is always to keep your property and use it to generate income in the long run.