Tips on Buying Rental Property
Buying a property can be exciting, and at the same time, nerve-wracking. When you first scout the web for properties that you can buy, you will see tons of ads showing you different homes and condominiums at different locations and from different developers. You will see different offers with different promos, payment schemes, and freebies. You will also encounter property specialists inviting you for a presentation on what they are selling.
At this point, chances are you would be easily enticed to buy your first property. But hold on, here are some tips you should consider before you invest your hard-earned money on real estate.
- Find a great location.
This is probably not the first time that you have heard of this. When you first do your research or ask people before buying a property, chances are you have been told that location is everything, and that is mostly true.
Many people get attracted to and buy projects that are somewhat inexpensive and find that the reason why they were cheap is because of its not-so-great location. When you buy a property, especially if it is your first purchase, consider not only the total contract price (TCP) but also the potential of the location. Is it a safe and decent location? What are the nearby establishments? Are the homes and establishments in the area appreciating in value? These are just some of the questions that you need to consider.
Of course, the location is not just what matters, but it is a very important aspect. It will dictate how you would make the most out of your property, so do your research and study the location.
- Consider buying a preselling project.
If you are not in a hurry to acquire your own property, you may want to consider buying a preselling project.
When you buy a preselling project, you buy the plans of the developer for the property in the future. That is why it is important to choose a reputable developer, so you must do your research first. The main advantage of buying during the preselling period is the cheaper cost of the property. You get to buy it before it appreciates in value and before you get trampled on heavier payment schemes. Usually, if not always, preselling projects have lighter payment schemes and longer payment schedules.
Before you consider this, you must go back to the abovementioned first tip: find a great location. Again, do your research. Would this property appreciate in value in the future? Would there be nearby establishments? What are the development plans for this area? Ask yourself these questions first.
- Do not forget the hidden and additional costs.
“No spot downpayment. 60 months to pay. Zero percent interest.”
You may come across these terms when you first scout for a property, and while these are very attractive and persuading, you must first look beyond its face value.
To be fair, these are not scams, but you should first ask about additional fees that might break your bank. More often than not, there are hidden taxes and charges that are computed and added to the list price. Furthermore, before transferring the property to your name, there are also fees that you need to pay first. Moreover, some projects may offer a low, stretched downpayment from 10 to 15% of the total contract price, and for the remaining balance, you may opt for in-house financing or bank loan. However, it is important to note that most banks would not offer loans above 80% of the price, so that is another thing that you should consider in the long run. Lastly, you should also consider costs for repairs, renovation, and purchasing of furniture and appliances.
- Invest in interior design.
Some may think that renovating a property just for the sake of a rental business is not important, but if you want to attract more tenants in the future, consider investing in interior design.
Interior design is not just about “beautifying” the property. It is also about making it actually livable and more convenient in ways such as choosing ergonomic furniture, buying electricity-efficient appliances and gadgets, and making the most out of the space that you have acquired. Compared to unfurnished units, furnished units actually get higher rental rates and more tenants. Of course, who would not want to live in a well-designed space, right?
If you cannot afford to hire an interior designer, you can find tons of do-it-yourself tips on the web so that you can design your home yourself. After all, you get the final call on what happens to the inside of your property.
- Look for long-term potential and valuation.
To cap off everything that has been mentioned above, the main point here is to look for long-term potential and valuation when buying a property. Consider the course in the long run. Will this property appreciate in value in the future? Will this be a profitable investment? What are my future plans for this property? These are some points you have to ponder on.
Many times, when we shop, we tend to do it by impulse. However, this should not be the case when purchasing a property. There are many things to consider including location, cost, and reputation of the developer. These factors will dictate how your property would fare in the market in the future, so do a lot of thinking first before acquiring one.
In real estate, think long-term. Make the right choices, and your wallet will thank you in the future.