8 Careful Considerations while Investing in Residential Properties

8 Careful Considerations while Investing in Residential Properties

Debates are still going on whether investing in residential properties is worthy in comparison to commercial properties. To be honest, commercial properties always require money in lump sums, and long leases, whereas residential properties keep things easy for their investors. No matter to what extent you have gone for negotiations, renovating properties or searching for profitable ones, you have to ensure the best investment returns, or otherwise, money-making will remain a dream to you.

Be it creating your portfolio or buying a property, here are a few wise suggestions that would help you in the long-run in taking good decisions:1

1.Look for properties soaring in value – Properties whose value have possibilities to undergo massive growth are those that score high in terms of their location. Properties lying close to schools, churches, beaches, central business districts and public transport are the ones that are sure to raise their values in future. With this facility, you will have that confidence as a landlord to raise its value.

2.Look for clean properties – The cleaner a property is, the higher are the chances to allure good tenants. Moreover, big-sized bedrooms, noiseless areas, and off-street parking are the three big positive sides of a property to be rented. Remember, tenants would always like to choose a property that would meet the requirements of the majority living in that area. Moreover, a reliable income stream can only be generated from a full tenanted property.

3.Identify bad properties – The biggest reason why some properties are marked as cheap because they have little demand and adequate supply. Instead, it is always worth paying for those properties that have a good market value in top suburban areas, and these properties are so-called good properties. So, paying less for a property that hardly anyone wants is a big no in respect to money-making.

4.Ensure fair returns on every renovation – Property, and renovation go hand in hand. The trick is whichever type of renovation you are going to initiate, make sure that it creates a major impact on your property value. There are several low-cost and quick renovations like fence painting, recarpeting, new blinds installation, changing cupboard doors of kitchen and more. So, you need to check that for every dollar you spend on renovation, you are getting a fair return as per your property value.

5.Refinance your property as a backup – Once your property value starts soaring higher, just grab the opportunity to get it refinanced. This will help you create a buffer zone that will help you in times of emergency. In fact, you will gain more confidence to continue making the mortgage repayments while it will hardly make any difference even if you go jobless. No matter what happens, never land yourself in a position where you will be almost compelled to sell the property at a low price.

6.Bring good tenants for a long-term – If property management seems to be a challenging or tough job for you, look for an expert or a professional property manager. He will make use of his expertise and experience in bringing good clients who will be able to pay high rent. Now, once you get a good tenant like this, make sure that they are signing an agreement of not more than 12 months. If this is done, you can be assured of enjoying a regular monthly income for a whole long year.

7.Do not sell for making profit – It’s a common misconception among investors that selling is essential for initiating capital growth gained out of a property. What they forget here is that taxes, selling costs, and re-buying costs get incurred in the process. Instead, refinancing will be beneficial in terms of profit-making whereas, the appreciating asset will be kept as it is. In other words, it will work similar to a reverse mortgage.

8.Don’t pay heed to the concept of time – There are many who prefer waiting till they find that now it’s the right time to buy a property. This is not relevant in the case of long-term investors because they do not bother about the so called right market time. Investors can never think like speculators. Being an investor, if you can afford to purchase and sustain your asset, you will never judge time in the context of buying a property.

 

So, keep these points in mind and proceed accordingly just what a wise residential property investor would do.

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