If you are planning to buy an investment property, then there are a lot of things that you need to be careful about such as the down payment, interest rates, location of the area, and the prices of the property in a particular area. You also need to deeply analyze whether or not a particular property is ideal for investment.
If you are thinking, how can I buy an investment property, then read further:
Get the Down Payment
You will need to pay a large down payment than the owner-occupied houses when you are investing in property. This means that investing in properties has some stringent approval requirements which need to be fulfilled in order to own it. You will require at least need to make 20% investment given that mortgage insurance given that it is not available on rental properties.
Beware of High-Interest Rates
Interest rates on the investment property are often higher than the mortgage interest rates. You will need a low mortgage payment that would not finish up your monthly profits greatly.
Calculate Your Margins
Firms that buy old and distressed properties always aim for 5 to 7 per cent of return as they need to pay their staff. It is advised that individual property investors should set a goal of over 10%. You must also estimate the maintenance to be 1% of the entire property value on an annual basis. Other costs that you need to keep in mind are the insurance, association fees, property taxes along with other monthly expenses such as landscaping and pest control. Apart from that, there is landlord insurance as well.
In case you are new to property investment, it would better to study the market thoroughly. Check out our website to know more on investment properties and how you can turn out to a successful investor by putting money into the right property.
