You have decided (or been told by your accountant / financial advisor / parents / cousin / random person in the street) to invest in property. Great idea - its a tangible asset and people will always need somewhere to live. But where you you start? What do you need to do? Here are our top 4 things you need to do with a bonus one, just because its always good to get a little extra every now and then.
1. Get Your Finances in Order
It doesn't make sense to go looking for a rental property to purchase without appropriate financing in place. Before you begin the search, get your finances in order by obtaining a copy of your credit report and cleaning up any errors that might stand in the way of securing the necessary funds. You should also talk to an expert whether that be a bank or a broker and find out your capacity allowing you to be more confident in your ability to secure financing when the right property comes along.
2. Research the Neighborhood
Just because you find a rental property you like doesn't mean it's a smart purchase. The value of any residential property can be affected by the neighborhood that surrounds it. Looking into the growth history of the area, as well as the condition of other homes adjacent to your prospective rental property, can give you insight into the long-term viability of a property. If the neighborhood is not attractive, finding renters for the property could be difficult.
3. Find an Easy to Maintain Property
You won't be there on a day to day basis to do little minor repairs like you might do at your own home, so you want a property that is solid construction and in good condition at the start. Its also great to have all the bells and whistles but you are responsible for the costs of repairs and maintenance if they break so it is a good idea to take this into account when you are looking at properties.
4. Inspect the Property
If you've found a rental property you're interested in purchasing, get the property inspected by licensed building and pest inspectors. These professionals can inspect various aspects of the property, including structural integrity and the functionality of the property's utilities. This allows you to have a proper understanding of the condition of the property and what work is required before you purchase it. If there are major structural issues, you may decide to move onto the next property.
Bonus Tip - Start Talking to A Property Manager
Get to know what you need to know. A good property manager will know what the demand is like in the area both at the time and over time and this information can guide you on finding the right property. If four bedroom houses are popular in your area it is a good idea to look for these rather than something else that is hard to find suitable tenants for. They can also give you an idea of possible rental income you can achieve on properties you may be interested in.