HOW TO CHOOSE THE RIGHT PROPERTY FOR INVESTMENT
There are many options to start your investment, and today property is the most preferable type of investment. Choosing the right property is very important to reap the benefits. You can be assured that you will enjoy a sustainable capital growth for many years and your property will rarely – if ever – be vacant, which will practically guarantee your property investment success. Here are some useful tips that are required in choosing the right property for investment purpose.
Most importantly, price does matter. Not every property you invest in has to be a “bargain”, but you should never pay too much for a property. This is why, before you made a choice, talking to people and get to know your market is necessary. Go talk to people who understand about property investment and do detailed calculation before purchasing a property.
ENVISION YOUR IDEAL TENANT
You need to imagine who you will rent your property to. Your choice of tenant should influence the type of property you buy and the type of neighborhood that will interest your desired tenant. You don’t want a dingy studio in the middle of an upscale suburban neighborhood. By purchasing properties that fits well with the area, then you’d find it easier to get qualified tenants.
Next, you should estimate your desired rental income. Once you’ve found a property you would like to invest in, it’s time to learn what you can get from your investment. What are your goals? How much income do you expect to generate over the coming years with your investment? Making sure you’re investing in a market with stable or growing rental demand, as this is a final major factor to consider when picking a property investment. You want to avoid putting your cash flow on pause.
Most investment properties have an initial monthly shortfall, which diminishes as the rental increases and eventually covers all the property expenses. This is the break-even point, after which the property starts generating a monthly surplus. The acceptable period for a property to reach break-even point depends on many factors.
The older the building, the higher the maintenance and repair costs are likely to be. The better the condition of the building, the higher the rental potential. There are, however, exceptions – like inner city properties, which have a totally different dynamic. It’s also important to consider the age of your property in relation to the other property within the vicinity.