Buying an investment property is one of the biggest decisions that you could ever make. Short of deciding to become a parent, it has long term ramifications that far outreach the simple act of signing a contract. Often, it can be a harder decision than buying your own home because you only get financial benefit from it compared to your own home with is both financial and physical.
The reasons why people buy into the property market as an investment are many and varied, however typically there is one common ground and that is to make money. Sometimes it’s part of a long term plan, on other occasions it may be in reaction to something such as a friend or relative doing the same, or in response to some marketing.
The longer planned an investment property, typically the better the result – however that planning should also be accompanied by thought and due diligence. Often, people send months going to open houses to find their own home, yet will buy the first property presented to them at a seminar – and often without checking to see if property is in fact the right way forward for them.
Typically, you should have a long term financial plan – with various assets, including property, being part of it. It should consider cash flow, tax, your time frame (always allow sufficient time, say – 10 years) and your expectations. How much risk do you want to take? Do you have any experience in investing? Who can help you? There are a lot of questions you should be asking, and a lot of answers you should be getting if you’re going to spend hundreds of thousands on an investment. A few take points to keep in mind:
The list is not quite endless, however it’s a lot longer than the above. However, it’s a good start. If you’re thinking of getting into investment property, plan ahead – even 5 years in advance is great. If you fail to plan, you’re planning to fail.