A Beginner’s Guide to Investment Property – Signs of a Smart Buy

Investment Property

Investing in property is undoubtedly one of the best investment opportunities available.

Compared to other investments like equities and bonds, property investing has low volatility and the potential for an excellent income return.

If you are completely new to the world of investment property, you will want to check out the following guide, which includes signs to look out for to make a smart buy.

Renting Property

The two main ways of getting a good return from an investment property are to buy a property that you rent out or purchase a property that you flip.

The former involves purchasing an abode and becoming a landlord. You can make money by collecting rent each month.

Though, you need to be aware that you will be responsible for costs like insurance, maintenance and replacing appliances that break.

Finding tenants can take up a lot of time, too. But you always have the option of hiring a property management company to handle things for you.

If you decide to rent out a property, you can charge rent that will cover your costs until the mortgage has been paid off. Thereafter, the majority of the rent you charge will be all profit.

You should apply for a mortgage loan online prior to looking for properties to rent.

Alternatively, you may be in a position where you can purchase a property outright; in which case, you will generate a profit from day one.

Rent is not the only way to make money from a rental property. Most properties appreciate over time, so at some point, you should have the option to sell your property and make a tidy profit.

Flipping Houses

Flipping houses is another popular form of property investment.

Instead of purchasing a property to rent out, you would find the right property to buy, do up, and sell.

Most house flippers hold onto their properties for a short amount of time; around three or four months.

If you have good DIY skills, you can potentially sell a property quickly after buying it and renovating it; and then make a healthy return on your investment.

Signs of a Smart Buy

Whether you are intending to purchase an investment property that you can rent out or flip, you will get the most out of your investment if you choose the right location.

Buying a property in a good neighbourhood will be much easier to rent out or flip and make a healthy profit.

You also need to carefully consider the type of property you buy.

For instance, you could purchase an off-plan property, which has yet to be completed, a refurbished property, which would be easy to rent out and command a good rental price, or a residential property that needs work done to it but which you are able to handle, which would be an excellent choice for a flip project.

Whether flipping or renting, you need to thoroughly inspect any property you are considering purchasing before you proceed to ensure it will be a smart buy.

And, most important of all, you need to make sure the numbers add up.

It is crucial that you spend time looking at the cost of buying a property and the other expenses you will have to pay out of pocket and weighing up those costs against how much you can expect to receive in profits over time.

As long as you are savvy in the way you approach an investment property, you can make a tidy profit from your investment, either in the short term or the long term.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.