Is now the right time for you to get into property investment? On the outside, it seems like an easy decision – buy a property, let others pay the mortgage, you make money doing nothing. The reality is, a lot of work goes into owning investment properties, it is a big responsibility and a financial commitment. Investment properties can be a wonderful way to earn income, but there are many things to take into consideration.
Questions to ask before you invest in property:
- Are you ready to be a landlord? Will you find your own tenants? Who will handle upkeep and maintenance issues?
- How is your financial situation? If you have a lot of debt, it may be best to pay that off before purchasing a property. Do you have money saved up for a nice down payment? What if the property, or part of the property is vacant for a period of time, can you still afford the mortgage?
- Are you prepared to pay the monthly expenses that come with investment properties? Have you run the numbers to make sure your plan would be a good financial decision?
- Real estate is often a long term investment, do you have a plan in place for how long you would like to keep the property?
What to do before you purchase an investment property:
- Surround yourself with the right partners. Some of the people you may want to have around are a Realtor, accountant, lawyer, and handy man. Friends may make good partners, but that is not always the case.
- Set your investment goals. Why do you want to invest in real estate, how many properties do you want in your portfolio, how long will you keep them, and what numbers do you need to reach your goals?
- Start in the right price range, not real expensive, but not a fixer upper either. Make sure the property is also in a desirable location.
- Are you prepared for tough times financially. Unexpected repairs, extended vacancies, or not being able to sell the property when you would like can end up being costly. Can you cover these types of financial burdens?
An investment property can be a great way to earn some extra money while you spend most of your time working at your regular job. Although it seems easy to own investment properties, they can turn out to be a lot of work, and a financial drain. Before deciding to invest in properties, make sure you are ready for the responsibility and you are prepared for the good and bad times.