Property investing is one of the key pathways to achieving your millionaire status.
You have read online and heard that people have made a lot of money from Property Investment. Should you immediately jump onto the bandwagon and buy one?
Every successful business is based on good groundwork. A good businessman knows that only with the right information can you succeed in any business endeavor. You need to equip yourself with all the necessary information to successfully carry through with an investment.
It is the same with property investment. Here are the 5 Important things you need to know before you invest.
1. Understand the country/ local laws
Do not be fooled by unscrupulous “land agents” who will sell you bogus property.Bogus property is when both the property and the title deed are under different names. There are many cases after the transaction, you are in the middle of your stay or constructing your hotel, when another person claiming to be the rightful owner of the property turns up claiming you trespassed. In many cases of fraud, court cases are have known to be lengthy and expensive.
Check if the property has a caveat on it. A caveat sets limitations to the subject property. Make sure you are eligible to buy property in the country or area. Double check if the property will be under your name and that you will get the title deed. It would be good to check if there are any outstanding loans or debts associated with the property.
2. Back to basics
If you’re not well-versed about investment property then this would be a good time to learn all about it. Learn at least the basics. Here are some few pointers to get you started:
- The different types of properties – There are various types of properties you can invest in: residential, commercial, and industrial. You’ll need to decide which one of these you’ll want to invest in. Also read up on conversion requirements. Conversion is when you bought a residential property and you would want to convert it to commercial. Different countries have different requirements, contributions and costs. i.e Properties in urban citys, that do not have a carpark, requires the owner to contribute to paying for car parking space. This means that the owner pays a certain amount of money to the government for maintaining the carpark.
- The different types of investment – You can be directly or indirectly involved in an investment property. When investors talk about property investment though, they usually mean the direct type of investment. This means you will become the property owner and you’ll have complete control over the property. Indirect investment means investing in a product or service that is affected by a property’s performance.
- Landlord insurance – This is an insurance to protect landlords from financial losses due to property damage, theft or rental payment default.
3. Determine the numbers
- Cost and expenses – Before purchasing an investment property, know first what probable costs and expenses come with it. Aside from the actual upfront cost of the property, also determine any repairs you would need to do in order for it to fully function. Also consider the insurance, utilities, maintenance and property management fees you will need to shoulder when in operation.
- Return of investment – Probably the most important number you will need to check before investing is the ROI. Although nobody can really give you an assured and definite ROI, it’s good to know the possible numbers. Can you profit from this investment or will it be a sure loss? You have to know this before buying an investment property. Capital Appreciation and Rental Profits
4. Be familiar with the advantages and disadvantages
As with any big investments or decisions you must do, you must first learn about the pros and cons. It will help you make better decisions if your decision is an informed one. Find out the advantages and disadvantages of property investing before making a purchase. Know the advantages to weigh if the investment is worth taking up and learn about the disadvantages to prepare for the possible negative outcome of investing.
5. Know what to buy and where to buy
Based on your knowledge about investment in property, determine what property you want to buy. Aside from the type of property you want to invest in, also determine what features you want the property to have. You can base this on the market you want to attract. For example, for a residential investment property you may want to include a second bathroom for families or you may want to pick a property close to shops and cafes for singles and couples.
Also know where to buy the best properties. A key in doing this is to regularly check your local dailies. You’ll need to know where the hot markets are to be up to date with the property trend. You can also check online for bustling neighborhood that are good to invest in.