Investing your funds can be a good way to build capital and protect your financial future, but it can be a nerve-wracking process too. Many people choose to invest in real estate because they believe it’s a safe investment and something they’re familiar with.
However, buying property as an investor requires a different set of skills than when you’re purchasing a home for yourself. While real estate can be seen as low risk, no investment is guaranteed, so it’s vital to do your due diligence. With this in mind, take a look at these four signs you’re ready to invest in real estate:
1. You’ve Considered Other Options
Before deciding to make any form of investment, it’s important to consider all your other options. By assessing whether other types of investment could be suited to your needs, you can ensure that you select the most appropriate option. The amount of money you’re investing and the level of risk you’re willing to take will always impact what type of investment is right for you.
2. You’ve Sought Professional Advice
Getting professional advice from the get-go can give you a head-start when it comes to investing. Consulting a financial advisor can be a good way to ensure you’re making the right decisions when it comes to managing your money, for example. Similarly, speaking with a tax consultant can help you to formulate your investments in a way that reduces, rather than increases, your tax liability. If you are thinking of investing in a multi-level property, it’s important to get advice from a strata lawyer like Michael Teys, so you fully understand the complexity of having multiple occupants.
3. You Know the Pitfalls
Investing in property might seem straightforward but there are plenty of pitfalls to look out for. If you’re purchasing an apartment or commercial unit in a larger block, for example, you’ll want to use strata lawyers to draft your contracts. The by-laws governing the usage and management of shared spaces can be complicated in these types of investments, so getting legal advice is always worthwhile. Similarly, understanding the purchase process of any type of property and the length of time it can take to complete a sale is vital if you’re thinking of investing your funds in real estate.
4. You Understand the Costs Involved
When you’re calculating whether a property will make a good investment, it’s easy to focus on the current sale price and the potential resale in the future. However, there are many costs you could incur during this time. As well as professional fees to facilitate the purchase, you may need to fund repairs or renovations, advertise for tenants and/or pay a lettings manager to deal with the day-to-day management of your property. All of these fees can impact your overall return, so be sure to take them into consideration.
Making Your First Property Investment
If you’ve done your research and spent time getting to know the market, you might feel like you’re ready to begin investing. If so, take your time when it comes to finding potential properties. The location, structure, and condition of any building affects its value, so it’s worth scouring the market until a great investment opportunity comes along.