A Basic Residential Property Investing Guide
There are a lot of people who look to a residential property investing guide to help them understand if this is the best choice for their investment portfolio. This basic residential property investing guide will help you to understand the factors to consider when investing. By the end of this guide, you will be able to determine if residential property is the best investment for you.
The Purchase Price
When you look at buying a residential property as an investment, the purchase price will be very important. You will want to ensure that you are not paying too much for the property. However, paying too little could also be a problem as the property might have issues which cost a lot to fix.
The purchase price should ideally be below the median for the area and for comparable property. The purchase price should also be one that you can comfortably cover either with a cash payment or with a mortgage. If you are going to get a mortgage for this investment, you need to ensure that the monthly repayments do not cause financial hardship.
The Income From The Property
This is not a factor that all investors will need to consider, but if you are going to rent the property, you need to think about the income. The amount of rent you get each month should cover the costs of your mortgage. You should also ensure that you are making a profit over this which means that the rental income should be greater than the mortgage repayments.
If you are not going to be renting the house, you may want to consider how you are going to cover the costs of owning it. This will generally not be too hard if you are looking at a short-term investment property. Flipping the property will generally be a short-term investment which should not cause too many financial issues.
The Expenses Of The Property
There are a number of expenses that you have to consider when you buy an investment property. If you are renting the property out, the tenants will be liable for the council tax, but there are other transfer fees you have to face along with maintenance. This will be over and above the costs of repaying your mortgage if you have one.
The expenses of the property should be as low as possible. You do not want very high expenses and this will limit the return on your investment and could cause hardship if you have problems. If you are unable to slip the property in a short period of time, you do not want to default in your mortgage. Additionally, you do not want to have to cover part of the mortgage because the rental income does not stretch far enough.
House Price Growth
For a residential property to be a viable investment, it needs to appreciate over time. This is not something that always happens and you need to be aware of this. To ensure appreciation, you have to choose the right location and ensure that your house has room in the market to move. The cheapest house in the best neighbourhood will generally be a better investment than the best house in a neighbourhood with potential because the potential may never be recognised.