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How to Buy an Investment Property: 5 Tips

Although there have been instances down the memory lane where the real estate investment has suffered steep declines, the itch for the investment is still existent and prominent as well. However real estate does not refer to a person’s next home. Time and again, the real estate has been one of the regarded as the best forms of investment in terms of making easy and stable money. The estimates report that last year real estate investments reached as high as 1.09 million which is a significant rise over the past year figures. The survey was carried out by the National Association of Realtors. As a matter of fact, every fifth house that is bought currently is an investment property.

A FEW TIPS TO CONSIDER BEFORE DECIDING ON A REAL ESTATE INVESTMENT

The real estate investment has the potential to yield amazing profits for the owners only when the things are done right.

Some few tips that can help buyers in choosing the right property to invest on are summed up as under.

  • ENSURE A FINANCIAL STABILITY BEFORE STEPPING IN

This is one of the most fundamental and basic things that should be checked before choosing to buy a real estate property. Can one’s financial condition handle the charges associated with the buying of the property? Are all the debts of the person cleared off? Does the person have a steady income? These are some of the factors that can help to decide whether to buy a property or not. One of the main things that should be kept in mind before making a real estate investment is that no such investment can provide a substitute for the retirement savings. Thus one needs to have some additional plans for retirement savings.

After considering one’s financial capability, he needs to jot down all the associated costs of making the investment. The buyer needs to reserve a room for the down payment and the monthly mortgage bill from his salary.

  • THE RISK ASSOCIATED WITH THE PROPERTY

Much similar to stock and mutual fund investments where the performance needs to be carefully studied before making any further investments, a thorough analysis regarding the potential and risks associated with the property needs to be made prior to making the investment. All the rental properties need not be necessarily risk-free. The risk associated with the property varies from region to region as well as with time. A buyer should look out for properties which are definite to return at least 14% which is also termed as ROI. It should, however, be noted that while calculating a loan amount the rules for investment property financing are much different from the primary homes.

  • THE CHOICE OF REAL ESTATE AGENT

The agents who tend to provide the buyers with the best property options rather than considering them as mere commission houses should be carefully picked from the lot. The agent should well understand the needs and conditions of the buyer and provide the real estate property options as per the conditions only and only those which have a higher return on investment.

  • THE INVESTMENT PROPERTY NEED NOT MATCH WITH THE IMAGE OF YOUR DREAM HOME

One should ditch his personal wishes pertaining to properties when it comes to buying of investment properties. Only those properties which have chances of higher return rates at lower front hand investments should be carefully chosen from the lot. These need not clash with the criteria that the buyer had set for his dream home. Another major factor is the location of the property. A location which ensures high-quality tenants should be chosen for making an investment.

  • A PROBABLE COMPLICATION IN THE TAXES

It is advisable to hire an authorized tax practitioner to help out in handling the taxes. Every single expense pertaining to the property needs to be tracked in detail and the difference between repair and improvement should be distinctly understood. The tax practitioner can also help out the owners in getting those tax benefits from the Government which would lead to lower amount of taxes.

CONCLUSION

A buyer must take all the above factors into serious consideration before deciding on a property to invest on. However, the viability of all these factors varies from region to region based upon the demands or the taxation system in the country. Therefore, each factor should be analyzed very carefully to land at a decision. When a person invests in the right property, it is no less than a gold mine with very minimal maintenance and an assured stable income.

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