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Property Investment: The Beginners Guide

Investing in property is an increasingly popular investment option taken up by many over the world. The reason being property prices tend to rise over the years. There are some blips and certain places where house prices fluctuate more than others, yet they are a solid investment for the long term and in some cases, short term positions. There are multiple ways to invest in property, and once invested, multiple ways to make money off of it. People do it in different ways, yet it can be quite dangerous for beginners who have a bit of cash to play with. It’s hard to lose it all as if you were day trading in the stock market, but you can lose a chunk of your investment capital if you aren’t careful and end up making a rookie mistake. There are a few to make. Advice on investing in properly completely changes from country to country. Not only are their different laws to adhere to, but prices and taxes change. The layout of advice can even change from town to town. This is why, whatever advice and tips you read or hear, you need to ensure that you apply them to the locale in which you want to invest. These can help you get started, good luck!

Visit The Property At The Outset

One of the most important things you need to do is visit the property when you get interested. Some people don’t and it comes back to bite them. Others do this when they know exactly what the area is like, or if they’re going to demolish a property, or if they’ve had years of experience behind them. Never buy blind. When you go to view the property, first you need to check for damage. This could be water damage. If it is and you want to avoid this again it might be worth reading a channel drain overview. Check the house thoroughly for any signs of leakage, mould, damp, or structural damage. You might want to take a surveyor with you, who knows how to properly identify structural issues around a property. This is the same if you’re buying commercial property. You also need to look at the property’s boundaries to check if everything is in order on the edges. It’s a lot of work to put into something if you’re not sure whether you want to buy it or not, but it’s work that is needed if you want to avoid losing any money. At property auctions, this is sometimes skipped. Never bid blind. The lots are usually released beforehand so you’ll know what to research/view. If they aren’t, be careful. Especially if you’re bidding online.

Home Or Away?

Sometimes, to get the kind of property you want you may need to consider buying out of your town. The issue here is that wherever you live now, be it a rural community or inner city, you know about. You know which areas are cheaper to buy in because they’re closer to rough neighbourhoods, or because the air quality is low. You don’t know these small things in other cities. This is why investing in property in your home town is such a bonus. You can really find jewels and put bids in quickly because a lot of the research you’d normally do will be in your head already. If you want to buy it in another city, then more research will be needed. If you’re going into another country, then you need to start looking at regulations and laws. A mistake here can cost you a fortune in alterations and future fees, let alone any kind of fine so make sure you know what you’re doing. There are some great finds abroad for properties of all kinds. Even landholdings can be lucrative, especially if you’re willing to hold long term. Usually, more experienced buyers will go for overseas markets, but you can do it if you think you’ve found a great opportunity with the research to match.

Development?

A developmental buyer will focus on land purchases, they’ll then build on the land. If you worked out how much your home cost to build vs how much you paid for it you might be in for a shock. This is how developers make money. You can scale this to your starting capital. You might just want to build the one home on the plot, or you might want to build a couple. You could even build an apartment block. It all depends on your appetite for risk. There’s a lot more cost involved in construction etc. which will turn into a full-on project management job instead of simply touching an existing property up etc. This is the route a lot of builders take. Having knowledge helps keep costs down and they can even build the houses themselves over a longer period of time. Development is a great opportunity to make a huge profit margin, but you’re also tied down in planning permission, building regulations, etc. So make you know what you’re getting involved with before you buy the land. Also, you need to make sure the land is valued right, it’s slightly different to bricks and mortar property so make sure you know the price is fair before parting with the money.

Buying To Rent

Buying a house or flat is a legitimate way to get onto the property investment ladder. It simply involves purchasing a property which you then rent out to someone. A popular strategy is to use the rental money to pay the mortgage off, and when the property increases in value over time you make a profit at the end. The downside is you don’t see the profit for a long time. Other people might get an interest-only mortgage and use the rental income as additional income. Buying to rent is a good option and fairly straight forward but you need the deposit first of all. This is usually more than when you buy your first home due to government regulations. Also, you need to research the location. Certain areas are more popular than others and thus command a higher rental return. As it goes on, you can save up the money for another deposit and keep going this way. Be careful though, you don’t want to end up over mortgaged and end up having too many payments to keep up with.

Flipping Houses

Most people have heard of flipping houses. It’s another way to make money in the short term. Essentially, you buy a home which might be run down and in need of moderate to significant work, do the said work, then sell the house n for a profit. Going down this route is about balancing the books. How much are tradesmen going to cost V’s your overall profit margins? You might want to do some of the work yourself, which is fine if it’s superficial like paint, but if it’s structural, or something like plumbing or electrical you’ll be better calling someone out to do it for you. Otherwise, you could end up messing something up or hurting yourself. It helps if tradesmen go into flipping because they can save a packet on tradesmen costings. You need to make sure short term market events don’t mess up your plans too. Sometimes these are unavoidable, but you need to make sure you plan as best you can. Look at what other homes have sold for in the same location, then look at the one you want to buy and work out the potential profit, including taxes etc. too.

Research The Local Area

It’s important to research the local area before buying anywhere. This is because things might be changing which can impact the house value. This isn’t always a bad thing though, it could push the value up. You need to look for things like more houses being built, factories going up, forests being demolished, maybe a school shutting down. All of these will adversely affect the value of a home in the catchment area. When you’re buying abroad, it’s harder to do this research especially if they speak a different language so try to bear this in mind as best as you can. It’s why so many developers start out in their own country or native city. If in any doubt, you can call your local authority or council. Sometimes you may have to pay for information, this may put you off but it’s better than buying the property only to lose a whole chunk of money when the values go the other way. Research is always king in the property game and should be conducted before you part with any money. If you’re in a partnership with someone it can be easier to split these responsibilities, but you need to be double sure you’re not missing anything. It’s no one else’s job, and no one cares whether you succeed or not more than you so do the work and save yourself the loss in the end game.

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