Buying your first investment property can be an exciting process, but also a complicated one with many things to consider. Making sure you get the first one right will undoubtedly have a major bearing on how successful you are within the property game.
To help get your investment property plan off the ground, here are some top tips on buying your first investment property:
Prepare yourself for some home improvement work
Many first-time property investors overlook a key detail when rushing in to purchase a property, and that is how able they are to carry out the work required. To see profit from an investment, you will almost certainly need to carry out a fair amount of work to bring the property up to standard. Are you able to do this work, and to the required standard? If not, do you have access to someone who can?
Remember, hiring a tradesman to do this work is straight forward enough but can be much more costly than doing it yourself. If you’re going down the route of hiring someone, make sure you have fully evaluated these additional costs before completing that first property purchase.
Reduce other debts
The first property investment is nearly always the toughest for many reasons, not least the added financial burden that it can put on you. To give yourself the best chance of success, and so that you have enough funds available should you need them, you should always aim to reduce other debts before purchasing that first investment property. Credit cards, student loans, etc. They all add up.
Research the market thoroughly
For property investors, having a thorough knowledge of the local property market is a prerequisite. It may be that the cheapest property is not always the best to invest in, and instead opting to purchase a property in a promising or up-and-coming area is a much more sensible idea.
Also, be on the lookout for long-term improvement projects happening in regions, research if there are any major businesses due to arrive in a town or new transport links to key cities being formed. All of these can create real opportunities for property investment if you get in early enough.
Think about the tenants you are targeting
Before taking that first step, take the time to really consider the target market you will be aiming for with your property. If you are planning to rent it to students, for example, it may need to be within walking distance of a university but the house itself doesn’t need to be luxurious. Simplicity and practicality are likely much more important.
If business commuters in to the nearest big city are your target, transport or road links are a must, while furnishings will need to be of a higher standard with high-speed broadband and other such amenities included.
Consider how hands-on you want to be, and the ramifications
Purchasing an investment property and then shaping it in to a liveable house is just a small part of the property ownership industry. Additionally, consider just how involved you will be on a day-to-day basis when it comes to answering tenant enquiries, chasing rent and organising for repairs. If you plan to appoint an agent for these take, take in to account the costs of doing so.