Property investment is one of the biggest decisions that you’ll make in your lifetime.
You see, if you pull it off the right way around, you will create a passive income that can be used to either improve the cash flow of your business or improve your lifestyle.
Fixing and selling the place can provide you with the initial capital for your entrepreneurial project or enable the next major investment, while there’s always a chance that you’ll start using the property as a place of residence or your own business space.
With that in mind, here are a couple of tips for first-time property investors.
1. Find a Professional
The first piece of advice when buying a property is that you shouldn’t do it on your own.
This is why you need a buyer’s agent.
Next, when signing a contract, have a legal expert review it.
Consulting a tax accountant is also pivotal in order to ensure that everything is done according to regulations.
Lastly, when inspecting the place, you want to contact a contractor, as well as one or two other specialists.
All in all, using professionals will reduce the odds that you will regret your investment.
2. Do Your Research
The more you learn about a certain topic, the better your odds at making it in this field will be.
Still, when learning about a topic, it’s incredibly important that you get valid information.
This is why, instead of focusing on hearsay or things you read from an unreliable source, what you should do is look for adequate investment property seminars.
You can supplement this by downloading an e-book about property investment and subscribing to a reputable real estate market newsletter.
Armed with these materials you simply can’t fail.
Even better is to actually visit places where you intend to invest, especially overseas.
A number of foreign countries offer favorable property prices such as the USA, where many states such as Florida and Nevada still have relatively cheap properties for sale since the 2008 crash.
Of course, it’s a scary prospect owning a property in a foreign land but if done right, can be a lucrative investment.
Anything short of actually moving to the USA, your best option is to have a management company over there you can trust take care of the property.
3. Choose How You Want To Make Money
The next thing you need to understand is how exactly do you want to make money.
Do you want to invest in a rental property or do you plan to fix and flip the place?
Are your plans to rapidly fix and sell the place or do you want to get your hands on a property in a prime location and then sit on this investment until its value skyrockets.
The truth is that there are so many ways to make money by investing in property but you need to learn your options first.
4. Learn About Tax Benefits
One of the best things about investing in a property is the numerous tax benefits that will suddenly become available.
Some benefits (like capital gains tax) are important if you, eventually, decide to sell the place.
On the other hand, benefits like tax depreciation are always relevant.
You see, as time goes by, any asset that you own loses value.
The structure on the lot that you own will get older and older and it’s this wear and tear that diminishes its value.
Seeing as how there’s no sense that you pay the same amount in taxes for a property that’s worth less than the previous year, you get to benefit from tax depreciation.
5. Set Realistic Expectations
The last thing you need to understand, as a potential investor, is the fact that your success mostly depends on your expectations.
This is why, unless you want to be disappointed, you need to learn how to set realistic expectations.
For instance, the average rental return on residential property is 1 percent of total value per month, while for a commercial property, it’s about 4 to 5 percent per year.
Also, when selling the place, even with the best effort to improve the resale value, there’s only so much you can do. in other words, don’t expect that the property will double in resale price.
In the end, you need to understand that there’s no such thing as a 100 percent safe investment.
Still, by taking all the necessary steps of precaution, you can drastically increase the odds of your success.
If there were two things that you need to learn from the above-listed, it’s that you A) need to consult professionals and B) learn exactly what you’re getting into.