Cash flow is the king and every other person is in the race to develop a smoother and consistent cash flow for them. This cannot be achieved better other than investing in real estate, as the market is said to be the most lucrative one. If you have saved a good chunk of capital and want to invest it somewhere for a steady cash flow or just to get great profits on selling, then the real estate market is for you. Todays’ post is dedicated to tips and ways to buy investment properties. We will try to include all the factors of consideration in this business, but mainly we will stick to rental properties and how you can invest in them.
But before formally starting the discussion, we would like to tell you that before purchasing buy-to-let investments you must always remember the 2% rule. It is the prime rule in the investment market that says that any investor must never risk more than 2% of their total capital. Doing this will save you from big losses and going bankrupt. Without further ado, let’s start discussing our main topic.
Tips on Purchasing Buy-to-let Investment Properties
Before buying any property as an investment and specially to get rental gains, you must go through this checklist to make sure that what you are going to get is worth all the effort. Investments for rental gains are different from investment for annual yields and this post will make it clear to you what the actual difference is. Basically, annual yield real estate investments do not take much of the efforts by the investors generally, they take your capital only. Once you have bought a property for annual yield you just have to wait for the right time to sell it. On the contrary, for rental yield you have stay active 24/7 and stay involved with your investment all the time, and it also asks for constant re-investment. Keep the following things in mind before buying any property for rental yield to avoid any inconvenience or mishaps later.
Research About the Demand
The first thing that you have to do before buying any rental property is research thoroughly about the demand for such properties. For example, rental property is most demanded in the city centers while the demand lessens in the outskirts, as people tend to relocate to city hubs for better future prospects while in the vicinity or side areas they have their own places to stay. You have to carefully examine the appreciation of rental properties in the locality that you are going to buy your property in.
The Right Property in the Right Place
The second step is to know what property is right according to the location and pricing budget of the tenants. For instance, at few places furnished apartments are required by the tenants, in others, they would like unfurnished apartments, and at few places, houses and villas are loved by the people. You have to carefully examine what property is needed the most in your area.
Check for Age and Condition
Once you have done enough research and finally you are able to get a property for you that you want to buy, the next thing that falls in the process is to check for the age and condition of your house. The age of the property can be checked on the papers, that when this property was actually built or you can see the bills to know when the billing started. The rest of the condition can be checked by having a tour of the house, but if you don’t have any prior experience and can’t tell by just viewing the property you can always seek professional help while buying property for investments.
Know the Rental Value of the Property
The next step is to know what actually the rental return is in the area. For this purpose, you can ask some real estate agent working in that area or you can just check it yourself on different property portals. If none of this is available then you can go around and ask people already living there about the rental value of properties in that area.
Fix and Upgrade
Once you have bought the property of your as well as the tenants’ choice, you have to prepare it for rent. For that, you can have the fixing and repairs done on everything that requires it. Moreover, having a fresh coat of paint, or vinyl flooring also adds to the value of your house. People would love such properties, and chances of lending your house become a little brighter.
Find Estate Agent
Finding the right estate agent to lend your property and manage it afterward is the key task in this whole process. The estate agents charge a little in return for all the chores that they do for you. Like, you won’t have to be there all the time for visits, or you just don’t have to engage yourself in all the paperwork and you won’t have to go personally to the property to receive rents. Rather, all of these chores are done by the estate agent at very little cost.
List Your Property for Rent
However, if you don’t want to hire an estate agent and want to save yourself some more money you can also list your property for rent on famous property portals and do the rest by yourself. This is definitely going to take some effort but you will be able to save a few more bucks for you.
Long Term Lending
Another thing that you have to keep in mind is that the property rentals business is a long-term investment. It is different from getting a dividend from shares or stock exchange, so you have to be fully prepared for this long-term financial commitment. If you are not ready for it this will give you nothing more than just a headache.
Calculate Recurring Cost
Keep in mind that investing in real estate is not just a one-time investment. It requires constant reinvesting and has few recurring costs too. For instance, few societies take maintenance and other charges from the owner and you have to keep a check before buying investment properties.
Determine Your Actual Gain
In the end, subtract all the charges and recurring costs that you had to pay to keep the property from the rental gains to determine your actual gain. This can be done easily by making a balance sheet at your end to save yourself from all this hassle.
Conclusion
Real estate investment generally, and buying investment properties, in particular, isn’t an easy task. You have to take a deep look into everything before actually getting involved in the business. But, with little effort and experience, you can master this skill and become able to get ultimate capital gains from the business. Since buying to let investments are the most ruminative and lucrative ones that’s why we always recommend considering this to our clients. If you have any queries regarding buying real estate properties for investment, feel free to leave a comment in the comment section, and one of our highly skilled representatives will be assisting you shortly.
