The Dos and Don’ts of Buying an Investment Property

Investing in property has become an increasingly popular financial strategy among people over 50. Whether you're looking to diversify your retirement portfolio or generate a steady passive income, the allure of investment properties is hard to ignore.

However, making informed decisions is crucial to ensure your property venture is successful and profitable. Below, we’ll explain the important dos and don’ts of buying an investment property, from how to research the market to how to do your due diligence.

The Dos of Buying an Investment Property

Research the Market

Before buying an investment property, it's essential to research the market thoroughly. Identifying high-demand areas and understanding emerging trends can significantly impact your investment's success. Start by analyzing neighborhoods with strong growth potential.

Look for areas with upcoming infrastructure projects, such as new schools, shopping centers, and transportation links, as these developments often lead to increased property values. 

Consider the local economy's strength and employment opportunities, as these factors attract tenants and buyers alike.

Set Clear Investment Goals

Setting clear investment goals is paramount when venturing into property investment. Aligning your property purchase with your financial objectives ensures that you make strategic decisions. Are you aiming for short-term rental income or long-term capital appreciation?

Understanding your goals will help you choose the right type of property and financing options. For instance, if you seek immediate rental income, focusing on properties in high-demand rental markets with low vacancy rates is advisable. 

On the other hand, if long-term appreciation is your goal, investing in emerging neighborhoods with potential for future growth might be a better option.

The Don'ts of Buying an Investment Property

Ignoring Due Diligence

One of the most significant mistakes investors make is ignoring due diligence. Skipping thorough inspections of properties and their surrounding areas can lead to costly surprises down the road.

Before making a purchase, conduct a comprehensive assessment of the property's condition, including its structural integrity, plumbing, electrical systems, and any potential pest issues. 

If the property has a fire escape, get a fire escape inspection report to ensure its condition and quality. Ignoring due diligence can result in unexpected repairs, legal issues, and difficulties in attracting tenants or buyers.

Overlooking Maintenance and Management Costs

Many first-time investors overlook the ongoing maintenance and management costs associated with property ownership. It's crucial to factor in these expenses when calculating potential returns on investment.

Regular maintenance, repairs, property management fees, insurance, and property taxes can add up quickly. Failing to account for these costs can eat into your profits and affect your overall investment strategy. 

To avoid surprises, create a detailed budget that includes all potential expenses and ensures that your rental income or property appreciation covers these costs.

Remember These Rules To Invest With Confidence

As you can see, many of the dos and don’ts of buying an investment property involve research and study. Investing in a property is not something anyone should do on a whim or without careful consideration.

Researching the market and setting clear investment goals while avoiding pitfalls like neglecting due diligence and overlooking maintenance costs are equally important. 

If you're ready to move forward, consider consulting real estate professionals for personalized guidance to build a profitable and sustainable property portfolio.

4 Benefits of Refinancing Your Home Mortgage

You've probably heard of the word "mortgage," and you know what it means: a financial instrument that lenders, like banks and credit unions, use to make home loans. 

But did you know that your mortgage can benefit you in ways other than making debt payments? Below are the benefits of refinancing your home mortgage.

Convenience and Increase Home Equity

Many lenders offer refinancing home mortgage options. It's really up to you, but once you have decided on a lender, getting prequalified before visiting the lender is the easiest way to ensure that you are getting what you want. 

Many banks have pre-qualification tools on their websites. Just enter your information, and you get an idea about what you can borrow. 

Other terms of the refinance may include an increase in the value of your home, so you can borrow against this equity to take care of other debts. This is known as a cash-out refinance, and you can use it to pay off consumer debt or even finance home improvements.

Lower Interest Rates

The first thing that homeowners consider when refinancing or selling their homes is how much they can save in interest payments. For example, if you pay 5 percent interest on your current loan, you can refinance a new loan with a lower rate. 

Even if the new rate is higher, the savings will be greater. Moreover, the lower payments will leave you with more to save for retirement or other expenses.

Turn Investment Property Into Owner-Occupied Property

If you own an investment property that you want to turn into an owner-occupied property, refinancing a home mortgage may allow you to switch from an investment mortgage to a conventional mortgage. 

This will allow you to sell the investment property and make a profit. If the new mortgage is an FHA loan, you can still keep your investment property and rent it out.

Lower Your Mortgage Payment

You probably pay more than the amount on your mortgage each month. You might also regularly make extra payments on interest or principal, such as when you first move into the home or take out a 30-year mortgage. 

If you decide to refinance, your new lender may agree to lower principal payments to pay off any outstanding balance. This is known as a principal-reduction refinance.

Refinancing your mortgage is a good way to save money on interest, get a lower payment, or even sell your home with little to no down payment. 

It's also a good option if you need money to pay off debts or make home improvements. You can use the money from a cash-out refinance to make some of these improvements.

Pests: Investing In Getting Rid Of Pests

Throughout most of our adult life, we've worked very hard for everything we have. At times, we didn't really put much thought into our decisions. Now, we are getting to a point in our lives when every decision we make has to be carefully planned and thought through extensively.

Investment

In today's highly competitive real estate market, locating, acquiring and maintaining an investment property is essential to being successful in the industry. With technology today, advertising our properties is as easy as taking pictures and pushing buttons on our mobile phones. If you take a quick look online, many will find an endless number of property listings for rent or for sale. 

Many take a look at pictures of the property, then read the location and amenities a property offers. The first thing that comes to mind when looking for an investment property is location and the age of the property. We then take a look at any nearby popular destinations and attractions that can be of suitable distance to the property. Now, we have carefully decided to invest in a property. 

We take a look around the unit and find that there is some renovating and cleaning up to do. You're thinking, "The property is located in an up and coming neighborhood, but the unit in the building is showing its age. Specifically, pests are a nuisance in a seasoned building. So what do I do?" Pest control is imperative in any type of investment property. Who do you turn to? Services such as https://www.moxieservices.com/can help with pest control.

Pest Control

Pests come in all shapes, sizes, and types. When investing in an aged property, we won't always know who previously resided there and how well they took care of the property. To name a few, pests like ants, mice, roaches, and spiders are most commonly found anywhere inside homes. 

If left untreated or uncontrolled, pest infestation can quickly invade the entire property. For instance, ants can wreak havoc. They deliver painful annoying bites that can leave red itchy bumps all over the skin. Investing in a professional pest control service has many benefits. 




It can prevent the devaluing of an asset, as it will keep your property free and clean of ants, mice, roaches and other pests. When potential tenants come to view the property, we will want to make sure the property is pristine. 

By contracting a pest control service monthly, it will ensure that potential tenants will see and know that we take care of our property. It is an investment that will keep giving back.

How Often

Certain pests cannot be avoided. The reason can be the local weather, the local area, or perhaps because of a neighbor. Regardless of the reason and where the pests are coming from, it is best to subscribe to a monthly pest control service. 

Some pesticides may seem effective at first, but the chemicals will slowly fade and the pests will come back again. By subscribing and hiring a monthly professional pest control service, it will keep the pests away while keeping your property clean and safe. These professionals can also give recommendations in preventive measures against pests. 

An experienced pest control service will be able to reach every nook and cranny of the property making sure no area was left untreated. It is also best to let them know if there are pets living in the property. We would want to avoid any harmful chemicals reaching them, making the property unsafe for pets.

Value

So we've decided to invest in a monthly pest control service. Now it is time to reap the rewards from our investment. Month to month, our tenants comment that they are very pleased with having a monthly pest control company come and visit to get rid of pests. 

They tell us, "I have recommended my friends and family to move here as well. We can see that you maintain your property well and keep our living spaces pristinely clean." We smile back and a call comes in, "Hello. I am calling today to inquire about renting a unit from you. I was referred by Nancy and John. They said that they highly recommend living there."

4 Things to Consider When Purchasing Your First Investment Property

Buying property, when done right, can pave the way to wealth and create financial freedom.

Whether you’re a first timer or a seasoned investor looking to diversify your portfolio to include property careful, strategic planning is vital to your success.

Here are some of the biggest things you need to consider before diving in to buying an investment property.

Can you really afford to invest?

Before the hunt for property even begins you need to work out how much you can afford to invest and more importantly, how much the bank will lend you.

Seek out a certified financial planner or accountant, to get the most accurate understanding of what you can afford. They’ll conduct a cash flow analysis and crunch the numbers so you can base your decisions and strategy on hard data.

There are several hidden costs to factor in when buying property, which include: financial advice fees, legal fees, building inspections, insurance and ongoing maintenance and repair costs.

Think long term

Smart investors know property investment won’t make them rich overnight. It’s a long term game.

Take one of the most successful investors, Warren Buffett for example, who says: “If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.”

Get the right advice and outline the best investment strategy

Don’t be afraid to turn to the experts for help. A solid investment strategy needs to be based on data, tailored to your specific financial circumstances. Ask yourself, “Why do I want to invest in property”. 

Finding the right investment strategy for you is really a question of risk versus return. How much risk do you need to take to get a defined outcome? Having a clearly outlining goal of what you are aiming to achieve will go a long way to understanding exactly how much risk you need to take to get there. 

 When speaking about risk, we mean debt levels, tax structures, location and type of asset. Speak to your financial advisor about your risk tolerance. The support of good financial advisors will make you a confident investor, save you time trying to learn and understand technical jargon and help you to avoid making costly mistakes. 

How do you find advisers you can trust? Shop around, meet with a few different advisors and always check their certifications.

Find a mentor

Educate yourself on what it takes to be a successful property investor. Find one of those who have succeeded in property investment and are willing to share their secrets to success through blogs, online community forums, published books and articles. Scour the internet for invaluable knowledge and tips from these mentors.

Treat your investment like a business. When selecting the right investment property to buy take your time to do the research. Gather as much data as possible on the area’s overall growth, housing market, job market and rental demand. 

When inspecting potential properties to buy, don’t get emotionally attached to a particular property, buy with your head. You are not looking to buy your dream home. The property needs to be structurally sound, clean, tidy and well maintained to attract tenants. Speak to family and friends who have invested in property about their experiences. 

Gaining insight knowledge from advisors and mentors can help you identify the best locations and types of property to invest in. Approach your property investment venture as you would entering into a business. It requires a detailed, well thought out plan, strategy and commitment in order to manage it properly and successfully generate income.

For more advice on property investment, visit www.otiumgroup.com.au and download the Ultimate guide to property investing.