While the idea of owning your own home definitely involves financial independence and marks a milestone in any young person’s life, owning an investment property means financial prosperity. It is the next step, in other words, or a level up from owning your first property – and you can make quite a lot of money of it as long as you do it right.
If this is the first time you’re investing in property for the sake of making money, you’ve come to the right place. Here is a handful of great ways to make sure you’re covering each step and making the right decision; it just makes it a lot easier to stay confident during the whole process.
Plus, it makes your chances of making a bad investment a bit smaller so that you can enjoy the feeling of finally prospering financially.
First: Investing abroad or at home?
A lot of prospective property owners will consider investing abroad at some point. The reasons are really simple, though, as the market at home could be a bit out of their league – or they would just like to own a holiday home which they can rent out when they’re not using it.
There are so many excellent properties by the beach all over the world, after all, and your dream of waking up the sound of waves before having a refreshing swim in the morning may be a bit closer if you invest abroad instead.
Before you decide on anything, it’s important to keep in mind that some countries won’t really allow foreigners to invest simply because they’re eating up all the profits from the local hotels and holiday accommodations.
Other countries are, on the other hand, more than happy to make the real estate dream happen for foreigners and may even grant you a visa as soon as you invest; make sure that you do your research, first of all, and you should be able to find the best country to invest in. Have a look at Singapore HDB, for example, and check out the various luxury properties they have to offer before you make up your mind.
If you would like to invest in a property at home instead, you’ll have an advantage in terms of already knowing all of the rules and regulations. Your options of bank loans will be a whole lot more, for example, and you could take out a loan on the home you’re already living in to finance your investment property.
It’s the kind of luxuries you won’t necessarily be able to enjoy when buying a place abroad so keep this in mind as well.
Next: Find the best area
When you have decided on the country you’d like to put your money in, it’s time to narrow the search and make sure that you’re not investing in an area that is about to be eaten alive by crime and teenage thugs.
If you already know the city rather well, this should be easy enough for you – but, otherwise, you should visit your different options and have a chat with those who live in the area as well. You can learn a lot by simply looking at your surroundings, scanning the area for broken bottles and graffiti, and taking the local amenities into consideration as well.
The more options you have in the area in terms of shops, pubs, and schools, the higher your chances are of finding tenants who would love to live in the area too. It doesn’t really matter if the street is littered with brown pubs or children walking to school either; for the former, you’d definitely be able to find a young and fun-loving couple while the latter would attract tenants who are in it for the long run.
As long as the area has something to offer and isn’t bothered by crime, you’ll be able to find good tenants for it. Have a chat with the local police station as well, by the way, if you would like a bit more insight into the crime rate and the direction the neighborhood is heading.
Finding good tenants
When it comes to renting out a property, most landlords would point to tenants as their number one problem. Some of them are reliable, friendly, and neat while others are impossible to get a hold of when the rent is due – and they’re not likely to take care of your property either.
Whether you invest in a property at home or abroad, your number one concern is going to be finding responsible tenants who will look after your property. If this is something you’d like to avoid having responsibility for, it’s probably better to give the job to a real estate agent; that way, you won’t have to be in touch with the tenants at all and can simply wait for the rent to tick in each month.
If you’d like to handle the viewings yourself, on the other hand, and save the money by not hiring a real estate agent, you need to figure out how to spot a good tenant – and how to avoid the worst kind. Try to find one that arrives at the viewing on time, looking sharp, acting friendly, and is willing to provide you with all sorts of references. These are likely to treat your property with love and care as well.
You will have to trust your gut-feeling, in other words, but when you have done this a few times, it’s not that difficult to spot a responsible person when you meet one. Have a look at this article if you need some more guidance before handling those viewings and you should be in the clear.
While owning your own investment property can provide a lovely and passive income, it can also turn out to be a real nightmare if you choose the wrong tenants or invest in the wrong area. By following the steps above, you’ll feel a lot more confident about the process.