Property Investment: Things You Should Prepare First
With so many types of investments available these days, there’s one investments that’s always considered as highly promising–it’s property investment. The property market has indeed created a lot of successful investors with huge profits. Not only in the form of houses, it’s also in the form of apartments, lands, offices, or any other buildings.
So it’s not surprising if today people are more interested in shifting their investment to the property industry. Only one, the problem is not everyone made their investment in property after had prepared themselves first. Investment in property is promising, but it doesn’t mean it’s easy. In addition, the risk of property investment is quite high. If you haven’t prepare yourself well enough, it’ll be a disaster for you.
Now, before you make any steps further into property investment, these are the things you should be aware of.
DO YOU HAVE ANY REPAIR or SERVICE SKILL?
This is not a joke. If you’re just started your investment in property, set of repair skills could be a big help for you. Whether it’s painting the walls, fixing a clogged toilet, changing a light bulb, or repairing other parts of a damaged building, should belong to your essential list before making any step into property investment
Yes, some people will think this job can be handled over to handyman or someone is more skilled than yourself, but this option costs you more money too. What if you can do all those repair jobs by yourself? You’ll have better profit.
PAY ALL of YOUR DEBT FIRST
Often, property investors will make a loan first to start their investment. But, this is not a recommended step. If you’re just started, you should consider the other method to make your investment in property. Or maybe, wait until you have no more debt in your account. As long as you’re still have debt, it is not recommended to start your investment in property. Pay all of your other debts first.
DO YOU HAVE EXTRA MONEY for DOWN PAYMENT?
Make sure you have enough money or more for the down payment. Because in property investment usually requires bigger amount in down payment, compared to buying a building that will be occupied by its own owner. It also has tighter approval requirements and other extra costs.
BE CAREFUL with HIGH INTEREST RATE
These days, making loan may look easy and cheap. However, the interest rate when you’re going to invest in property could be higher. So, make sure your budget plan first. Make sure too if you will have low interest rate, so the profit will not be used much.
MAKE THE MARGIN (PROFIT) CALCULATION
When it comes to profit, some researches said large companies usually put target around 5 to 7 percent. While individual investors put higher target–around 10 percent.
But the essential thing to remember is when you’re making the calculation, you should make a budget plan too for the maintenance fee, insurance, property taxes, and other annually costs you should provide.
AVOID to BUY SECONDHAND PROPERTY
It’s not something new, many people are tempted to buy secondhand building with low prices, then turn it as their property investment, after renovate it first. It might look interesting, but it’s not also recommended. Especially for the beginners.
Unless you have a skilled colleague or a trusted contractor who can be asked for help. Make sure you are not wasting a lot of money to renovate. Or maybe, look for buildings with price below the market average, and only need small improvements.
CONSIDER THE OPERATIONAL COST in PROPERTY INVESTMENT
This often went forgotten by property investors. Especially to them who were just started. To avoid losses, make sure you always calculate in detail the operational costs needed for each unit. Starting from repairs, tax costs, and any others. Some people might say operational costs on new property will cost around 35% to 80% of gross income.
CHOOSE LOW-END CATEGORY
For those of you who have just started a property investment with limited budget, there’s no harm in choosing low end properties. Notably, if you choose to invest in house buildings–you can choose a house with simple specification first.
The goal is, of course, to be in accordance with your budget plan. With this principle, the priority is to have an asset first. Then, you can develop it with the profits from the first tenant.
SUITABLE LOCATION and REGIONAL PLANNING MAP
This is the most important.
If you’re already feel confident enough to invest in the property industry, the next thing you should be aware of is the location. Look for the information about the location that attracts your choice. Will it be an industrial area? Business area? Families living area? Then choose the most suitable property for the area. Choose the one which will be promising in that particular area.
Investing your money in property is tricky. Yes, it is promising, but it’s also dependable to many things. It’s different to stocks or the money in your bank account. You cannot sell part of the invested property. By this condition, you can also consider working with experienced partners in the property industry, to help you make any first step into property investment.