When it comes to investing in property, there are a lot of things that you need to take into consideration. This is because the real estate market can be quite volatile, and you don’t want to end up losing money on your investment.
Here are some useful tips that you should keep in mind when planning to invest in a property.
1. Do your research
This is probably the most important tip that you will ever receive when it comes to investing in property. You need to do your research and understand the market before making any decisions. This includes learning about different types of properties, as well as the prices of properties in different areas. By doing your research, you will be able to make more informed decisions about where to invest your money. There are a lot of resources available online and offline that can help you with your research.
2. Know the LVR limitations
One thing you should research is the LVR limitations in your target area. Most banks have a maximum Loan to Value Ratio (LVR) of 80%. This means that they will only lend you up to 80% of the property’s value. So, if you’re planning to buy a property for $200,000, the most that the bank will lend you is $160,000.
If you plan on investing in international real estate, knowing this information is all the more imperative. Different countries have varying LVR restrictions. If you plan to invest in real estate in New Zealand, you need to know about the New Zealand LVR restrictions. There is a difference in restrictions between owner-occupiers and investors, where the former can get loans of up to 80% of a property’s value from banks while the latter can get up to 60%. That means owner-occupiers will need to put in a 20% deposit to purchase a property, while investors need to put in 40%.
This is important to know because it will affect how much money you need to bring to the table when buying the property. If you don’t have enough money for the down payment, you may need to look for other financing options or consider a different property.
3. Location is key
One of the most important factors to consider when investing in a property is its location. You want to make sure that the property is located in an area that is growing or has potential for growth. This way, you can be assured that your investment will appreciate over time. Additionally, it would be easier to sell the property in the future if it is located in a desirable area. Some things to look for in a desirable location include:
- Proximity to amenities: Is the property close to schools, shopping centers, public transportation, etc.?
- Neighborhood: What is the neighborhood like? Is it safe and clean?
- Resale value: What is the resale value of properties in the area?
These are just some of the things that you need to keep in mind when choosing a location for your investment property.
4. Work with a professional
If you are not familiar with the process of investing in property, it is advisable to work with a professional such as a real estate agent or a financial advisor. This is because they will be able to give you insights into the market and also help you find the right property to invest in. They will also be able to guide you through the process and help you make the best decisions for your investment. They will also be able to negotiate on your behalf and get you the best possible deal.
5. Have a long-term perspective
When it comes to property investment, it is important to have a long-term perspective. You need to think about whether the area is likely to experience growth in the future. This is because it can take several years for the value of a property to appreciate. Therefore, you should only invest in a property if you are willing to hold onto it for the long term. That said, you should have the necessary preparations to hold onto the property for the long term. Investing in property is not a get-rich-quick scheme. It takes time and patience to see any return on your investment. Be prepared to hold onto the property for at least 5-10 years before selling. Be patient and wait for the right opportunity to come along.
6. Find financing and create a budget
There are different ways to finance your property purchase. You could take out a mortgage, use your savings, or get a loan from family or friends. It’s important to compare the interest rates and terms of each option to find the best deal for you.
Investing in property can be a costly endeavor, so it is important that you create a budget and stick to it once you get your financing in order. This means taking into consideration all of the costs associated with the purchase, such as the down payment, closing costs, and any necessary repairs or renovations.
Following these tips will help you make informed decisions when planning to invest in a property. However, it is still important to consult with a professional before making any final decisions.
