Investing in property is an excellent way to generate financial security and build wealth, but there are pitfalls that need considering before you take the leap. Here, we cover the basic do’s and don’ts. DO… Check Your Finances As any property management company will tell you, making an investment is a great way to safeguard your future; but before you start you should definitely have a good funding base. This is not an option for anyone looking to dig themselves out of a financial mess. Planning This stage is key; it’s a great idea to get a few notes down on what you are aiming to achieve, your budget, the risk you’re willing to take and where you see the investment taking you in five or ten years time. You may like to ask yourself if you are interested in renovating and improving properties or would you prefer just to be a landlord? Also consider if you are planning to use a property management company to help you. Factor in a Timeframe Buying into this kind of financial commitment may well see you reaping zero financial gain for quite some time, so you must be realistic and manage your own expectations. For those in this for the longer term, the benefits can be fruitful, but this kind of investment doesn’t often bring short term gains. The housing market can be steady, but it does fluctuate, so you may have to ride the highs and lows. Know Your Stuff It’s advisable to know the market you’re buying into before you make any decisions. There is huge amounts of information out there, so wise up on your investment type and the wider market as well as that of the particular area you are considering. Be Prepared to Ask for Advice There are many experts out there who will be happy to help with any questions you might have. Property management companies hoping to secure your business will no doubt jump at the chance to advise you professionally on how to invest wisely. DON’T… Buy Without Viewing It is foolish to buy a place without having seen it first. A few pictures online won’t tell you the full story. You need to know the property and its location, assess its limitations, check to see if any work is required and, above all, get a feel for what you’re spending your money on. Be Impulsive You are about to spend a whole lot of money so don’t be persuaded to move too fast. Think carefully, take your time and go through things again and again. Ask friends or family and make sure you have considered all that is important to you. That said, don’t wait too long or you might miss out! Lose Sight of Your Aim Always remember that you’re in this to make money. You need to look at all the potential hidden costs and not just the purchase price because, in effect, you’re running a business and you need to know what you’re dealing with. If you are considering using a property management company you need to research their costs too, and make sure the impact on your investment is worth it. Cut Corners or Go Cheap If you’re planning to furnish your rental property, it’s a good idea to go mid-range when it comes to quality. Cutting corners and buying cheap will only result in poor quality goods that will break and need replacing sooner. This in turn will aggravate renters and destroy your reputation as a landlord. Remember that you will be responsible for making regular checks and producing an inventory. Again, you’re running a business so you need to be credible. If you’re considering investing in a property, start with the basics we’ve outlined above and you will be off to a good start. Consulting with a property management company is highly advisable as these people are the experts and may end up doing most of the heavy lifting with regards keeping your investment on the straight and narrow. Author Plate Danny Torres is from Torres Turn Key, a property management company in Rochester NY with more than ten years’ experience dealing with both domestic and international investors. Providing a holistic service for the property management of both commercial and residential properties, the company brings together a host of experience and specialist knowledge to build long-term relationships and create maximum value and benefit for their customers.
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