How Do You Choose The Perfect Property?
If there’s one thing that many investors can agree on is that property is one of the most reliable and lucrative investment opportunities out there. With the current uncertainty in the property market, more and more people are turning to renting instead, meaning that now is the perfect opportunity for investors to take advantage of the market. Of course, that doesn’t mean that investing in property is going to be easy. In fact, despite being incredibly reliable, it’s also one of the more hands-on forms of investing that you may ever do. The biggest consideration that you’ve got to make is also probably the first: what kind of property are you going to choose? This is crucial because the property that you invest in is going to have a great deal of impact on your experience as a landlord both regarding tenants and profits. Here are three things to consider when choosing an investment property.
Residential or business? Are you planning on becoming a residential or business landlord? This is a crucial question because they both require surprisingly different approaches. Residential properties are generally easier for someone first starting out as the tenancies are often a lot shorter. Business properties will usually involve far longer tenancies, and you’ll probably want to rent it out on a triple net lease. This means that the tenants will be responsible for all of the operating expenses on the property.
Maintenance levels. It might be tempting to buy a property that is incredible cheap but it’s a good idea to try and figure out why the property is that price. The biggest mistake that a lot of, especially first time, landlords make is that they buy a property because of the price but end up having to shell out a great deal of time and money on repairs and maintenance. A larger upfront investment might be off-putting, but it could end up saving you a fair amount of money in the long run, as long as you make sure of the quality of the property. Now, if it’s your only property, and you have the time and energy to spare, then having to do a little extra maintenance here and there might not be too much of a sacrifice, but be careful, those costs can really start to add up over time, and the last thing you want is to realize that you’re eating into your profits just keeping the place running.
What kind of tenant do you want? The kind of property that you choose will also depend pretty heavily on the kind of tenant that you want to attract. The area that the property is located in will affect the kind of rental prices that you’ll be charging, as will the size of the property itself. It’s all about maintaining the right balance between what you’re able to afford to invest and what you expect to get back. A lower investment will probably yield lower returns, but you don’t necessarily want to sink all of your capital in one place for the hope of being able to charge higher rates of rent.
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