Finding Your First Investment Property
Finding the right investment property takes time and research, but it is essential to succeeding in the property market, unfortunately finding your first investment property is often harder than most investors think. Eagar to buy a property, to start reaping the rewards, inexperienced investors often jump head on into the first property they find and for many of them this error can cost them dearly. This article will outline some of the things you need to know to find the right property that will generate income and not waste it.
You have the choice of searching for a property by yourself or with the aid of a broker. My advice to first time investors is to invest a little money and get a broker to guide you through the first purchase, if your plan is to buy multiple properties than I recommend you use a broker to help with all your properties until you feel confident about going it alone. If you’re looking to buy into a market that you don’t know well than a broker from that area can help you find suitable properties including new properties that have just been put up for sale, giving you the first bite. A broker with local knowledge, who understands the area that you are looking to invest in, is invaluable for both the beginner and the experienced buyer.
Understanding the local market is paramount to your success. Look for any discernible trends in that local property market. If housing prices are falling then there is a good change that the local rental rates will soon follow. Along the same lines, if the local prices have gone up in the past 6 months than the area must be in demand, meaning you will be able to increase the rent without fearing long term vacancies. If your target market is not too far away you should also visit city hall or at least visit their website to see if there are any development or plans for that area which could adversely affect property prices. It is also a good idea to contact the local police department to check the how safe the area is so you can find out if you should provide extra security to the property.
Once you have found your perfect property you need to make sure you have your finances in order. Before you start looking for financing you should check your credit report so you can find any inaccuracies that would prevent banks from loaning you money. Checking this yourself will give you time to rectify your record before letting the banks have a look. It’s best to check with all the credit reporting bureaus to get the full picture of your credit situation. Even if your report doesn’t seem that bad remember that the better you can make your credit report the better the interest rate you will be able to get.
While a renovator’s delight can be an exciting purchase I don’t recommend it for the first time investor. Although it means buying the property at a cost well below anything else you will find in the area the cost of fixing the property to a stage where you can successfully rent it out can very quickly break the bank, and of course the period that the property is being worked on is time that you can’t collect rent. Your first property should be one that is ready to be occupied, one that can start making money as quickly as possible.
You should of course inspect the property yourself and make sure it is too your liking but more importantly than that is to get a professional to inspect the property to make sure it is safe. While you can check the doors, the power points, the taps and the gas yourself, it definitely pays to get someone to look below the surface, beyond what you can see. Have a professional check the actual wiring throughout the house, see if there are any remnants of lead paint on the property and make sure that the building is structurally sound, you don’t want your first property to fall down around you.
I know that when you make the decision to invest in property you are so anxious to buy that you don’t want to go waste time and effort worrying about the property, you want to buy a property and start making money. But when it come to finding your first investment property it really does pay to take your time and double check everything before proceeding with the purchase, not only will it save you money and make it a more enjoyable