When Is The Right Time To Buy an Investment Home?
When talking about the requires a lot of strategic planning.
A lot of potential property investors fall prey to under planning and fail at the venture. Some people tend to see buying and selling a property as a get rich quick scheme, only to find out later how much strategy and work is involved in making it work.
While there is no such thing as a hundred percent risk-free investment, there are ways to make sure that you can have an advantage in the market.
The main key when deciding to get an investment home is gauging when the proper timing is. And here are some tips to help you find out when the .
The most basic requirement for an investment home is making sure that the property will be able to satisfy your criteria and comes at a manageable price. Sounds simple enough, but the truth is that arriving at this answer will require a lot more mental work, timing and financial strategies.
Make sure to do your homework
One common mistake of property investment hunters is being too emotional instead of logical when buying properties.
Remember – before making any purchase you want to learn as much as you can about the property. Find out how much the other properties in the area are selling for. Are you getting your property in the below or at least at market value?
Keep in mind that real estate agents are on a commission to sell. Agents may underquote the property value to raise interest. Or they may overinflate the value in order to make it appear as a bargain later.
Use your own sources for valuation.
Create a sound financial strategy
A deciding factor whether your investment will be a profitable success or a money pit is how you structure your payments.
If you are going to acquire a loan, then it might be a good idea to make use of the equity of your existing property to secure the loan. This can help you avoid additional costs like mortgage insurance and other high loan-value ratio mortgage instruments.
One of the best and most cost-effective investment strategies may be an interest-only home loan. Basically, you can structure the payment so that you pay the interest only for what normally ranges from 5 to 7 years before having to pay for the principal of the loan.
Again, consult with the right professionals. A good financial planner and mortgage broker are essential members of your team.
Don’t forget the ancillary/hidden costs
Never disregard all the property’s additional cost and find out the hidden ones as those can really add up.
Most people fall prey to the notion that owning an investment property is just like depositing money in the bank and it can just sit there.
First of all, there are fees like pest and building inspections that you may have to take care off. There are council and water rates that the vendor might require you to pay. Besides all the legal costs an investment property will set you back, there are also repair and maintenance issues that you may have to deal with.
And of course, you will have to make payments for fees like stamp duty, insurance and even advertising costs when you are planning to lease the home. Some of these hidden costs are critical especially if the property is going to sit unoccupied for a while.
If you have considered and covered these points, the time is likely right for you to buy an investment home.
If you are thinking of purchasing an investment property in Sydney’s eastern suburbs, feel free to give me a call.
