Buying real estate with a view to turning a profit is a very different situation to someone who wants to buy a home in which to reside. Many investors do choose to buy a rental property, especially with the rising land and house prices that just seem to go up in an ongoing way, but despite the risks, if you have your heart set on becoming a landlord, here are some useful tips.
- Can You Afford It? There are an awful lot of numbers to be crunched, what with the cost of the property, essential renovations, plus the legal and administration fees. You should be certain that you can afford the total investment, contact a Mint Equity experienced Sydney mortgage broker to help you find the mortgage that best meets your needs.
- Finding The Deposit - Unlike buying a home to live in, purchasing an investment property will require a 20% deposit, and it would be very difficult to find a lender who would take on the loan with a less than 20% deposit. If it can be done, then an independent mortgage broker is the person to contact, as he would have more lender connections than anyone else.
- Choose A Low-Cost Property - As this is your first venture into investment property, it isn’t a good idea to stretch yourself financially. Besides, buying a cheap home in need of renovation could make you even more of a profit in the long term. Buying a cheaper house will make the deposit you have to find a little lower, although you must be sure that you are able to renovate the property to the point where it can be rented out.
- Full Understanding Of Your Responsibilities - There's a lot more to renting out property than collecting the rent, and tenants are very well-protected, which means you are responsible for ensuring that the property is fit to be rented out. Any building repairs are down to the landlord, and then there is the matter of compiling a tenancy contract, which you will need professional help to do. There are some great tips available online for the person who is looking to buy their first investment property.
- Clear All Outstanding Loans - If you are going to move into the world of investment real estate, you will need the help of mortgage lenders, and any blemish on your credit history would not stand you in good stead when it comes to borrowing money for an investment property.
Many property investors outsource the building repairs to a property management company, who can also find tenants and make sure the property is always in good order. There is a fee for this, of course, yet most investors simply don’t have the time to spend on the property and would prefer a specialist company to oversee the running of the property, which would include providing reports and grounds maintenance.
A residential and commercial property management company will take all of your rent payments for you. If there is a problem with a tenant, they will sort it out. Everything relating to the management of the property can be handled by a property management company,
It is also worth mentioning that you should research the location of the property and calculate the amount of rental you can command. When looking at investment properties, try not to let your emotions influence your decisions, and view the purchase as you would any other investment.
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Good points.
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