5 Things to Remember Before Purchasing Your First Investment Property

This is a guest post by Rose Jensen

Stock and equity investments can be unstable, leading to many sleepless nights glued to the ever-changing market figures. On the other hand, property investments have a long history of stability, and may be the best choice for first time investors to make. If you’re thinking about investing in property, be sure that you are prepared for the work that will be needed to ensure that the investment is a successful one.

  1. Know that it will be a long term investment: A “short term” investment for property is generally five to seven years, so do not go into property investment thinking that you will sell it in the next year. To get the most out of the selling cost, you will have to wait, so decide if you have the patience to devote about five years to your property investment. Buying and selling rates also go through regular fluctuations, with prices peaking and then dipping about every seven years. Plan your purchase and selling accordingly.
  2. Get a financial advisor: To make sure that you can afford to spend the money for the investment, get some help from the experts. Consult financial advisors to talk you through what your investment will require in terms of time, renovations, and money. Don’t be afraid to ask questions if you do not fully understand because you should never make a haphazard investment.
  3. Only invest your capital: Never invest money that you cannot afford to lose. While you will not necessarily lose tons of money if you make a smart investment, it is always better to keep your hands off the money you need today and only invest the “extra” capital you earn. After all, that is what capital is for – growing your future wealth. Do not touch your living money to purchase any kind of investment, no matter how much you think you can make from it.
  4. Craft a plan of action: Decide what kind of property you want to invest in, how much you will pay for it, how much you will spend on it, and when, if ever, you plan to sell it. Because real estate is so localized with prices often dependent on location, look around and do your research as you plan your next moves. Think about the type of tenants you want to attract and plan accordingly.
  5. Choose your property wisely: As mentioned above, price depends largely on location. While some properties will have amazing prices, they may not be promising investments due to the local economy or location. Plan to invest in properties that are part of a diverse economy to avoid industry-specific busts, and also look for places that are established and thriving rather than a relatively new place. There is usually a decade-long settling period for new suburbs, so do not count on the suburb’s initial characteristics and tenants to necessarily be the final result.

This post was contributed by Rose Jensen, who writes about the online degree program. She welcomes your feedback at Rose.Jensen28@ yahoo.com

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