14 Tips When Buying Your First Investment Property
In our Guest Blog Post by Jamie Moulton from Just Property, you’ll get 14 vital tips to keep in mind when buying your first investment property.
14 Tips When Buying Your First Investment Property
Buying your first investment property is a daunting and overwhelming process on its own. And diving right into it without having the required knowledge will cost you a lot of time and money.
Which is why we give you here 14 tips to help you with your first purchase.
1- Don’t get too attached
Before getting attached to a certain property, you should look at 100 properties or more. The point here is not to get “Buyer’s remorse” syndrome which means regretting your purchasing decision after finding another property that costs way less and suits your needs as well.
2- Check the neighbourhood
The property could be the ideal investment for you with regards to its worth, size and its condition, however, the neighbourhood may not be suitable for you or your family at all. Before sealing the deal, you should check the neighbourhood first for any nearby schools, malls…etc.
3- Home inspection
Just because your property manager or realtor says the property looks good, doesn’t necessarily mean it is in a good condition. You should do your own inspection and check the property from the inside yourself. It might need major repairs that the owner ignored to mention or it might need a face-lift. If it has more problems than the seller disclosed, you can either negotiate a discount or ask the seller to make the repairs. In other words, home inspections are crucial if you really want to know the real worth of the property.
4- Set your goals first
Before going after a property, you should set your investment goals first. Decide beforehand if you are going to “buy-to-let” or you are the main beneficiary of this property. After setting your goal, you can start your search and save yourself a lot of time that could be wasted looking at the wrong properties.
5- Talk to your neighbours
It’s always advisable to know your neighbours first before sealing the deal. They have a lot of good and useful insights about the neighbourhood that will help you take the decision. Also, sometimes talking to your neighbours is for the sake of knowing more about them rather than getting information about the neighbourhood.
6- Plan your finances
You should always at all times plan your finance ahead of time before jumping into any kind of investment. Check your finances first to see how much you are willing to pay. If you are planning on taking a loan, make sure you will be able to pay it. Make sure your budget can handle such purchase. Setting a budget will spare you all the troubles and save you from wasting time looking at properties that are out of your league.
7- Stick to your budget
Planning your finances is one thing and actually sticking to them is another thing. Pushing your budget way too hard to make it fit your dream house will cause you real troubles on the short and long term. Always stick to your budget even if that means giving up on your ideal house.
8- Get help
Resort to a professional and local realtor who you can easily communicate with. Realtors will help you find what best suits you and meets your need. All you need to do is just find a realtor who is credible, discuss with them what you are looking for in a property and finally let them do all the work for you.
9- Never buy a fixer-upper
Yes! they will cost you way less than buying a new house but you will end up paying more for the repairs. This type of houses is what known in the field as “Alligator Property”. Whether you are planning on renting it or living in it, this property will always leave you with a negative cash flow.
10- Check the building’s condition
Besides checking the inside repairs, you should also check the age of the building and its condition. Some properties look appealing from the inside, but the building itself is in a really poor condition like having plumbing problems for instance. It’s always wise to check the building’s condition even if the property itself is in peak condition.
11- Secure your down payment
When finally settled on a house, make sure you have secured the down payment first. Also, make sure that your daily life needs won’t be affected by cutting the down payment from it. The best way to make sure this won’t happen is to start saving up ahead of time so as not to suffer when you decide to purchase a house.
12- Buy a home for tomorrow
Before buying a house, consider your future needs first. Don’t go buying a small house when you are expecting kids for instance. Don’t just consider your current needs and start thinking of tomorrow.
13- Be willing to compromise
Finding the perfect house the way you imagined it doesn’t always happen. Which is why you need to compromise a little bit if the property fills all the necessary checkpoints. For instance, a small closet isn’t a deal breaker and so on.
14- Don’t ignore any needed repairs
Some renovations are extremely costly but that doesn’t mean ignoring them is the solution. Make sure you checked all the needed repairs and secured the money for them before you go buying a house that you can’t even afford fixing.
About the Author:
Jamie Moulton is a Senior Data Analyst at JustProperty.com, a leading real estate portal in the MENA region, headquartered in Dubai, UAE.