Investments aren’t something you jump straight into. You need to know what you’re looking for, and what not only looks like a good deal, but will actually work out for your finances in the future. Financial matters are a big part of your life, and if you’re choosing to invest in real estate, you’re choosing to invest wisely. One of the best investments you could make, in order to make a long term, worthy return, is to purchase a rental property. We’ve got some advice for you below on those.
Working Out Your Financing Chances
The first thing to do is to work out how you’re going to invest. A rental property is something that’s going to guarantee you a return, yes, but how are you going to afford it in the first place?
First, you can buy outright, if you’ve got the capital to do so. This gives you a lot of guarantee over the property you’re interested in – there’s no mortgage to pay back, and the person you’re buying from will be much happier to foreclose quickly on the sale.
Secondly, you can also take out a loan here, and there are many mortgage types that could benefit you. Investment mortgages, also known as buy to let, are what a lot of investors turn to; you pay it back based on how much you make from the rent of the property itself. But you can also look to take out an hdb housing loan – these are specialised loans for apartments, if you’d rather invest in either part or all of a complex. All in all, you’ve got a variety of options here.
What’s the Neighborhood Like?
If you’re going to be investing in rental property, it needs to be in an area that’s desirable; it’s the number one method to ensure you’re not wasting money. This is ultimately because you want to be attracting a specific kind of tenant, and that means going where they are already.
You want to be able to fill the rooms in your rental property easily, at your desired rate, and that means doing a little research ahead of time. For example, if you don’t want to handle students applying, it’s important to stay away from investing in properties within university towns. If you want to rent to families, you need to find properties close by to good schools, which leads us on to the next point:
Determine what your ideal tenant looks like, and then think about the amenities in the neighborhood as well. What does that mean? Are there green spaces nearby? Places to eat? Things to do? Be sure to also look out for education opportunities, in terms of both schools for families and adult classes.
The Local Job Market
When you’ve found what you think is the right property, before you decide to sign on it, what’s the nearby job market like? How many people in the area are employed? How many companies operate in the area? And, what’s the average wage in the neighborhood?
Because all of these questions adding up together are going to show you what people are going to afford, what the market prices are going to be like, and how you’ll fare trying to make a profit here. Simply put, the more jobs in the area, and the more quality the jobs are, the more viable tenants you’re going to find to let out to.
Don’t worry, these questions can be very easy to answer, simply by looking through property websites, and using government websites to determine the history of the area as well. You could get a good picture of how the market will fluctuate via this method.
Looking Out for Future Potential
And finally, a worthy rental investment is going to have a lot of future potential, both on its own merit and because of the area it’s situated in. When you look at your property, can you come up with plans for it? Could you develop the property further from what it currently is?
For example, turn it into multiple apartments, rather than one big space to live in? Of course, the future potential of an area can work out both in and out of your favour; if any other apartments are bought or built, how will your profit margins fare?
If you’re looking to invest in a rental property that’s going to satisfy every single one of your financial needs, make sure you’re looking for certain features.