The first steps as an investor in the real estate world can be risky and complicated. Like any new approach, there is a learning process and by allocating time and studying the problem, the results will be positive. Before you buy a property, here are some steps to keep in mind.
Prepare the advance and set the rates for the loan
Financing through a loan an investment in a property is not the same as the financing of your own home. If you decide to invest and buy a property, expect a fairly important advance. Get ready the advance and study bank lending offers. Funding conditions are very important.
Decide if you want to rent or sell the property
Renting or selling an investment involves different strategies, so it is important to know what method you intend to apply. If you bought a property and you want to sell it after you arrange it, it is a quick way to earn capital. Renting requires shorter repairs and smaller investments, but it has a much lower return. The gains accumulate over time and the investment is amortized over a long period of time. Rental properties involve long-term commitments to keep tenants, but provide a long-term secure income.
Understand the local economy
Studying the current situation may be helpful. If you intend to rent, it is important to think long-term. Is the city potentially economical, or is the local economy declining? You need an economy that attracts potential tenants who will pay for long-term rent or you can always find quality buyers. Researching this economic situation will take time. Nobody knows the situation better than a local. Create relationships to understand if it is advisable to rent or sell a property. You can start investing in real estate in an area that will be familiar, close to your resentment.
Study the market
If you like a building, look for similar properties on the market. It is helpful to orient yourself according to the market price. Make a comparative study to see at what price you could rent your property, compared to other similar properties. Do not focus only on pricing. Verify if certain properties are for long available for sale on the market, then there are reasons why they are not leased. If real estate agents offer discounts, this indicates a market with few buyers. If the prices are high and few properties are available then the market is weak in quality offers and there are many buyers, that is, you have to compete.
Find out the costs for repair and maintenance
When buying a property, you also have to estimate the costs for repairs and improvements so that it is suitable for rent or later sale. Call a specialist who can find hidden building defects. If you intend to resell, evaluate correctly what costs are involved in the arrangement of the building. External repairs, painting, overhauling are much cheaper as structural defects or electrical network reconfiguration. Take into account not only repairs but also maintenance costs. If you want to resell, then you have to include these expenses in your plans, so you will not to lose. If you want to rent, avoid major repairs and renovations. Renting will bring long-term income, and the investment should not involve large expense.