Buying a home as an investment is markedly different from buying the home you plan to live in. Here, your subjective feelings about whether or not a home is “right” are less important than a cold calculation of the rental and future value of the property.
Begin by assessing the home’s surroundings. Look for clues to the potential value of the neighborhood in general. If the area you’re looking to buy into is expanding, as often happens when a new employer moves in or a school opens to the public, you’re likely to see a general increase in home values over time. If the neighborhood is serviced by adequate transportation networks—or it will be soon—this is also a sign that others are investing heavily in the area. Taking these factors into account can help you make the right decision about where your investment property should be situated.
Financing a property for use as an investment can be a complicated transaction. Decisions you make at the financing stage must be handled with the highest level of care by a motivated professional. By far, the best way to approach the complexity of your financing options is to partner with a WQ home loan manager who knows the process and who will equip you with the tools you need to ensure a profitable investment.
During the closing process, you might be obliged to pay for a home inspection, but the trouble it saves later on is generally more than worth the inconvenience. Other costs to factor into your calculation of how much to borrow include maintenance costs, repair costs, and stamp duties. Don’t forget to budget for the various fees and commissions that always go with buying and renting out property.
Here, it’s important to be realistic about costs. Most investors are also savvy enough to anticipate up to four weeks a year when rent is not being paid owing to the changeover of tenants. Be sure to work with an established real estate agent throughout the process to gain insight into the typical rental costs for the area and likely pitfalls in managing the property.
The keys to successful investment in real estate are thorough research, consultations with experts, and the clear-eyed determination to protect your assets when it’s time to negotiate a price. Knowing the costs in advance and budgeting accordingly not only makes the process go far more smoothly than would otherwise be possible, it helps you develop as a real estate investor who knows the process intimately and can usually turn a profit on your investments.