Of all the types of investments available, property is probably the least exciting. This is, of course, a good thing. There’s nothing more conducive to imminent heart attacks than an investment with the momentum of a roller coaster – and remember, that has ups and downs. However, if you’ve not dipped your toe in the property investment ocean before, here are five tips you may find useful. You can also find information online from savvy specialists like GlobalX , who provide a wide range of reports and data.
Do Your Homework
Whether you’re planning on investing in commercial or residential real estate, you can never skip your due diligence. That means getting your pest and building inspections done – and any title searches and tenancy agreements checked over by your legal team as well. These upfront costs may not be recouped, especially if you do not proceed with your real estate investment deal, but costly investigations early on in the process are a lot better than expensive mistakes down the track. It’s too late when contracts are signed and you find yourself responsible for a whole host of problems you didn’t know were there.
Trust Your Team
Who’s on your team? Who is your financial team (usually an accountant and/or a financial planner come into position here)? You may also work with a mortgage broker, or directly with your lender. You might also want to consider a tax lawyer, or at least an accountant with a good understanding of local and Federal tax laws. Then there’s your legal team – make sure they have experience in the kinds of contracts you want them to comb through. There are specialist property law experts and their services are not cheap, but are often worthwhile. Remember that the nice guy who helped you with your will is not the right person to check through property contracts. These are completely different branches of law. You may also want to add an insurance advisor to your team at some stage.
Ask, Ask, Ask!
Ask any and all questions that occur to you. Especially be sure to ask any and all that your legal and financial team ask you to enquire about. Remember, there are no silly questions – just really expensive mistakes. If the roof looks dodgy – ask about it. Not sure about the zoning? Ask the agent and check it again with local council. You can’t always be sure everyone gives you the right information, but if you don’t ask, you can be sure they have no reason to.
Why Are You Investing In Property?
As with any investment, it’s important to be clear on why you’re buying it in the first place. Are you aiming for cashflow or capital gain? How long do you plan to hold your property? At what point do you plan to sell, and in what kind of market? These plans do not have to be set in stone – nor should they be. The key to any good investment strategy is flexibility. That said, you do need to know what you want your property investment to do for your overall wealth creation strategy, and your financial team will help you with this.
Remember to Review
While you don’t need to check your property investment every day, as you would shares or a business, you do need to check in from time to time. You need to ensure your place is being well managed, and that the market conditions are as you expect. You may be pleasantly surprised that the area in which your real estate is located is booming, and you might try your luck as a seller; you might find it’s dipped and you need to consider what this means. Quarterly reviews for any investment are a good idea, and this works well for property too.
Property investment is one of the simplest investment vehicles available – and one of the most popular. If you’re considering trying your luck in this sector, remember these tips, and enjoy your journey.
Do you have any tips for newbie property investors? Share your advice in the comments box below.