If you are thinking of buying an investment property, there are probably many things running through your head. This article will help you get well-versed with the process and ultimately know whether you are cut out for such an investment.
Do You Know What It Takes to Be a Landlord?
There are responsibilities that come with being a landlord and some of them may not be pleasant. Can you unclog a toilet or a repair a leaky tap? If you are not the handy type and don’t have lots of cash to assemble a team for this kind of work, then you need a good property manager – someone who has at his or her disposal, a team of reliable tradesmen and technical experts who can do the work for you. Sophic Property Managing Director, Ricky Bhurji, has been working in property since 2005; he advises those looking to buy an investment property to ask themselves these questions and if they find they are not cut out for this new responsibility, to think twice before committing themselves.
Do You Have Personal Debt that Could Bog You Down?
Veteran investors may have the experience to carry debt as an investment strategy, but a person who is new to the “buy to rent” model needs to think carefully before committing to a property. Bhurji says that an investor with debts and obligations that may require a huge financial commitment needs to have a cash cushion, so that they do not get into financial difficulties; ending up with no cash to make debt payments. He advises such investors to have a margin of safety.
Have in Place a Down Payment
Buy to rent investments need a larger down payment compared to owner-occupied properties and they also come with tougher approval requirements. According to Bhurji, a 20% down payment may be required, as mortgage insurance is not applicable here. He advises investors to secure bank financing instead.
Location is Important
You do not want a property that does not attract tenants. Look for one in an area that is safe or has the potential for picking up. A place where population is increasing or has a revitalization plan in place is ideal for an investment opportunity. Bhurji, who has been in the property market for fifteen years usually tells his customers to look for a location where there are adequate employment hubs, amenities, decent schools, low crime rates, stable property tax rates, as well as a booming economy
Think About Landlord Insurance
You will need to protect your investment from eventualities by getting landlord insurance. With this, your property is covered against damages, lost income, and other liabilities.
With these considerations in mind, you are good to start with your investment. Sophic Property is committed to guiding new and seasoned investors seeking to buy and rent, helping them make sound decisions, and ensuring that they profit from their investment.