7 Must-know Property Investment Tips for Beginners
Real Estate investment is gaining a considerable amount of popularity as a means of passive income in the year 2020. Making money through investing in real estate sounds like a five-finger exercise, though that’s not entirely true.
Below we have covered seven must-know essential tips to consider before you set foot in the property world.
Choose your plan of action
In property investment, there are two investment strategies. The first one is to purchase a house or a workplace and rent it out. Second, buy a property, wait for its value to appreciate, or add value by refurbishing and then flip the property to gain profit. It’s crucial to decide on a game plan before going forward with the course of action.
Hire Real Estate Solicitors
It is wiser to rent out your property through a real estate platform that would act as a middle party between you, a landlord, and your tenant. Property Management companies will guide you through all legal processes needed to protect landlord-tenant schemes and contracts and handle any uncertain disputes.
Analyze the market trends
Studying market trends would help you choose the right investment strategy. For instance, in the current pandemic situation, the prices of houses are likely to depreciate while there is a rising demand for rental properties. Therefore, if you’ve studied the market trends, you’d be able to evaluate the situation and invest in an accurate market.
Understand risk factors
Every investment plan comes with its risks and challenges, and the same is the case with property investment. For example, an investor should be aware that he might not be able to flip his property due to the worldwide recession. At the same time, a landlord must be aware of the risks concerning tenants (whether they are trustworthy or not), by running background checks and getting assurance through legal paperwork.
The perfect location
Location is the most predominant factor to consider when it comes to real estate investment. Whether you’re looking for a buy-to-let property or a property to flip, the area you choose matters the most. The location should be an easy-to-sell zone with commendable returns if you’re looking for a flipping property. In case you’re looking for a rental property, the area you choose should be in high demand to ensure a continuous flow of renters.
Decide your target market
You should be well aware before purchasing a property about the group you’re targeting– college-going, independent singles, or families because most students or singles decide on locations convenient and easily accessible from their colleges and workplaces. In contrast, families prefer to seek places with better amenities, friendly neighborhoods, schools, parks, and religious centers.
Account for the facts and figures
With the help of an expert or a knowledgeable family friend, you should calculate your profit after taking all the costs and overheads into account. This includes the taxes too, which beginners usually forget to account for.
Especially when you’re looking forward to investing in flipping properties, you should account for the income and corporation tax. Calculate your expected profit to ensure that you’re not left with a zero in the end when the progressive taxes have eaten up all the property’s increased rate.
Once you have bought the first house and start yielding a good return, you’d be tempted to add more properties to your portfolio. It would be best if you’d diversify by buying different sizes of properties in different localities to reduce the risk factor and achieve quick success in the real investment market. The best way for the beginners is to expand gradually and patiently- one wrong step, and you’ll find yourself stuck or at a loss.
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