Seeing a Return In Property Investment – Expectations VS Reality

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It’s time to debunk the glitzy myths that attract so many into property investment. While property values can increase, the opposite is just as true, and your beloved investment could plummet in market price. This is a significant loss when there are six digits involved. While positivity is a great attitude, this shouldn’t be bundled with naivety – particularly the belief that an investment can be easily resold at a price point at or above your purchase price. A promising investment could mean a lot of hard work, time and, you guessed it, money. Stress and anxiety can be thrown into the mix too. While this sounds far from your easy-money fantasy, some research and strategies can help you avoid unnecessary sinkholes, even literal ones!

Research the market

You can avoid surprise fluctuations in the market by doing your research on the area you plan to plot your investment. Vacancy rates are a quick reflection of the area’s desirability. Checking statistics on recent sales and current offers versus the property values in the past can help you make a case for capital growth – whether the trend of property values are rising or falling in the area. Surrounding rental rates indicate the rental yield – not only will you have a starting point for how much you ought to be charging to attract tenants from the competition, but this generally calculates the profit from rent in relation to the property value. Convenience also affects rent, such as proximity to public transport and other amenities. This can help put you ahead of the crowd and help you call the shots with justification.

You reap what you sow

It’s not as simple as “more money = a bigger financial return”. It’s about where you spend the extra money and why that little extra TLC is expected to pay off in the long run. For instance, opting for an investment property with a second bathroom can attract more tenants, especially in the age of Airbnb. A secure garage in a reliable lock-and-leave property is a selling point for the working class demographic. Your informed decisions almost become a no-brainer and it becomes less of a gamble.

Securing long-term tenants

You might want to limit as much spending at the beginning as possible, but avoiding the glitz at every step does not mean compromising on longevity. Neglecting to check the property itself could not only cost you thousands, but an added cost of discomfort and anger from your tenants. This is why a pre-purchase inspection is a wise investment, preventing you from purchasing a doomed property built on faults, where renovations and fixes could cost you more than what it’s worth – you’d be better off looking elsewhere. Otherwise, fixable cons can be brought up with the seller, where you can negotiate a more suitable price point to assist you in your refurbishment projects.

A safe home from the ground up, with a side of convenience, is a reasonable recipe for securing long-term tenants and prolonged rental yield than any fancy home open can falsely promise.

Post by Jones Ballard 04 Oct 2018 0
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