Property is often said to be a stable and reliable asset for all types of investors as well as one that provides consistent returns over time. However, as with anything there are some pitfalls to this type of investment, which need to be managed. Here are some property buying tips for investment purposes from the head of customer delight at Nedbank Home Loans, Thozama Mochadibane.
Are You Flipping or Leasing?
If you are considering investing in property then you will first need to decide if you are wanting to own the property for long term leasing whilst realising capital value growth or if you are planning on buying, renovating and then selling for a quick profit.
Both of these options require planning and co-ordination and will have different time demands. With leasing, it is a continuous activity that has highs and lows in activity whilst flipping is a short-term project that needs dedicated and intensive management during the brief timeline.
What About Your Finances?
You will need to speak to your financial advisor to make sure that you can afford the property over the long-term especially if a property sits empty whilst incurring overhead costs without producing an income.
It’s a good idea to have a cash reserve saved up in a separate account for maintenance, transfer fees and so on.
Check Out The Area
When you are choosing a property, you will need to do extensive research in the area you are interested in as well as the property market in terms of what other properties have sold for recently in the area as well as proximity to amenities and any future developments in the area.
You need to take into account the tenants that you are targeting and if there is an appetite to buy properties in the area.
Get The Best Tenants You Can
The best tenants are those that pay on time, keep the property in good shape and treat neighbours well. However, it is not always that easy to find these kinds of tenants.
When picking tenants, you should do thorough credit checks, intensive screening and ensure you have an air-tight lease agreement. You should also take the time to meet a variety of potential tenants so you can get a gut feel as to the type of tenants they are.
Keep All Documentation
You will need to keep and maintain documentation to ensure transparency and manage expectations for everyone. You should send timely receipts to clients, review the contract on a regular basis and keep images in labelled folders. Also, having a simple maintenance schedule can help in smoothing out expenditure curves over time.
Property investing can look desirable and it can be a guaranteed money maker, but only if it is managed properly so that it can become part of your retirement plan and not just a burden.
Article Source: https://businesstech.co.za/news/banking/358557/5-tips-that-will-make-your-home-loan-investment-go-further/