X
This site uses cookies for analytics, personalised content and ads. By continuing to browse this site, you agree to this use.



Tips For Buying Your First Real Estate Property

Admin      February 20, 2020

Real estate has been the choice of world's wealthiest people, so there are ample reasons to think that buying a property is a sound investment. However its a known fact that with any investment, better to be well-informed before diving in with your hard-earned money.

It's tough being landlords? 

Do you know much about repairing leaking walls or unclogging a toilet? Definitely, you will call somebody to do it for you, but this will reduce your profits. Property owners having more than one house tend to repair to save money. However this change as one adds more properties to their portfolio. Experts say its better to put together a team of cleaners, handymen, and contractors. But this isn't recommended for new investors.

Pay Your Debts Before Purchase 

Regular investors carry some debts in their investment portfolio, but new ones must avoid it. Those have any loans, unpaid bills or children going to attend a college in future, buying a rental property might not be fruitful. Experts advise to pay down debts if returns are higher than the cost of debt. Don't push yourself in a position when you lack cash to make payments on your debt.

Secure Down Payments 

Real estate properties require a higher down payment than pre-owned properties. One needs at-least 20% down payment to be made given that mortgage insurance isn't available on rental properties.  

Beware Of Interest Rates 

The interest rates on borrowing money might be cheap in 2020, but its higher for investment property than traditional mortgage interest rates. Have low mortgage payment if you want good monthly profits.  

Calculate Margins 

Experts say that purchasing distressed properties provide returns of 5%-7% as they have pay staff. Moreover individuals must target a goal of 10% with annual property maintenance costs of 1% only.  

Determine Returns 

For money that you invest, what are your returns? Generally stocks offer 7.5% cash-on-cash return, while a bond offers 4.5%. In real-estate 6% annual return can be considered good, especially when the number will rise in future.

Prefer Low-Cost Home 

It's obvious that more expensive the home, higher will be ongoing expenses. Experts recommend starting with a mid-range house in upcoming neighborhood.

Location Matters 

Selection of profitable rental property is always dependent on the location having low property taxes and good amenities nearby. Moreover low crime rate neighborhood and growing job market will definitely return larger returns.

Conclusion 

Always keep your expectations real. As any investment, especially rental property will not produce a fat monthly paycheck for a while and selection of wrong property will be a catastrophic mistake. Prefer working with a professional real estate consultancy in UK on your first property purchase or rent your own home to test your landlord abilities.

Comments

You Need to Login First for Comment