If you’re looking for ways to invest in today’s current market, buying investment property is one of the most stable options. Well-priced property can provide a steady income that will continue long after stocks and bonds have fallen out of favor with investors. With so many potential risks looming on the horizon, it may be time to turn your attention towards security by investing in real estate.
Whether you’re looking to purchase your first home or you are already a homeowner thinking of expanding your property portfolio, the following are important tips to keep in mind when investing in real estate:
1. Location is key
It is important to know how the property market and surrounding areas have changed and developed over time. Property prices tend to be far more consistent compared to other investments, such as stocks. While a stock can rise and fall from one year to the next, house prices tend to stay within a certain range of growth depending on where you live (or where you’re looking to invest). Some areas tend to keep growing steadily, while others remain stagnant, or even drop in value. Always check up on recent property sales of similar homes in the neighborhood(s) you’re considering before making any decisions.
2. Know the market
It is good to keep an eye on the general trends of where property prices are at, but it is also important to look at the local market if you plan on buying or selling a house. Make sure you can purchase your investment for less than what it would actually go for on the market. For example, if you plan on buying a house in a popular suburban area and it has been on the market for six months with no offers, then it may not be such a good investment.
3. Consider capital growth vs. current yield
The two main reasons people invest in real estate is for capital growth and rental yields. Rental yields are pretty straightforward: how much can you expect to earn from your investment property each year? Capital growth, on the other hand, is a little more abstract. Consider this example: You bought a house in the 1970s for $25,000, it has at least doubled in value every ten years and it is now worth over $400,000. This would be an example of consistent capital growth.
4. Remember that not all homes are created equal
A home can be a good investment for several reasons. Some of the most common reasons include: It is in a prime location with easy access to schools, shops and transportation; it has excellent infrastructure, including nearby roads and public transport; it is already subdivided into smaller units or can easily be subdivided, and so on. All of these factors will affect the property price over time, which is what you are ultimately looking to make a profit from.
5. Finance is essential
Finance is an important part of property buying, so it is always a good idea to know your limits and stick to them. Remember, no matter whether you are purchasing a house as a primary residence or for investment purposes, you will need to provide proof of your ability to pay for it. Also, while it’s always nice to follow your dreams when it comes to being a property investor, know your limits before you commit yourself to any extra debt. It is always a good idea to put money aside for unexpected expenses and emergencies, so try to keep your borrowing within reason.
6. Stay informed and ahead of the game
A good realtor is an invaluable resource and can help you learn about potential investment properties before they even hit the market. Signing up for our free newsletter that sends our latest investment property deals straight to your inbox is also a great way to stay in the loop. In today’s competitive real estate market, it’s important to be one step ahead of other buyers. Certain properties can go under contract just hours after being listed; in some cases, they switch to contingent status before they even officially hit the market. The better the deal is, the more you’ll need to be on your toes and stay in-the-know. You won’t want to let a fantastic deal pass you by!
The opportunity to invest in real estate is not just for the wealthy. With a little bit of research and time, you too can find great deals on investment property that will pay off handsomely down the road. If you are ready to take advantage of this golden opportunity, reach out today! Our team at Honest Home Solutions has extensive experience in real estate investments, and we’re here to help you with your first (or next) investment purchase. Contact us now!