Purchasing your first investment property is a big step and definitely one of the largest assets you can buy. With a little bit of time and effort, your investment property can be a great way to generate active income. But before you plunge into the idea of investing in a property, you should start with the basics. Knowing how to find a good property, getting a mortgage and letting your house out to good tenants are all essential aspects of purchasing your first investment property.
Let’s take a look at the steps you will need to take to purchase your property as well as the challenges you may face along the way.
First and foremost, you need to learn a lot about how real estate works. Read a lot of real estate books, journals, blogs, and websites and join forums that discuss real estate business. You can get a lot of information on the Internet. This helps you get a grip of what this industry is all about and how to succeed in it like other property investors have succeeded.
Consider the property type
The most important thing to consider when buying an investment property is that you should know what type of property you want to buy. It could be a newly constructed home or a previously owned one. It could be a one bedroom apartment or a two bedroom townhouse. Do you need parking or an additional bathroom? Also, consider the location before investing. You need to consider all these aspects right from the very start.
How will you finance the property
There are many ways you can pay for the investment property. If you have the asking price in your hand, you can pay the whole price at once and avoid dealing with bank loans and mortgages. However, if you do not have the needed cash, you can opt for a down payment and then take a mortgage to pay the remaining balance. But if you consider taking a long-term loan from the bank, make sure to understand the bank’s long-term policies and the interest rate charged. It is advised that you stay away from adjustable rate mortgages as they may go up, causing your EMIs to rise drastically.
Find a good solicitor
A solicitor is a licensed property lawyer who can advise you on property laws, your rights and responsibilities as a landlord as well as those of the tenants. Property lawyers in Melbourne will suggest whether to or not to make the said investment in the property. They will also assist you in the documentation of the property paperwork, provide complete transparency in property buying and ensure all the approvals are in place.
Be realistic on your expectations
Like everything else in life, being realistic in your expectations when purchasing investment property is important too. Investment in real estate needs to be thought of as a steady, slow cash flow with long term appreciation. Do not expect instant returns or large monthly paychecks. Start by setting lower rent rates and then later increasing it gradually.
While there are many variables to consider when purchasing your first investment property, you should always start by doing your research. Look at the housing prices and begin saving for down payment.