Investment in property requires some intensive research, and can involve some professional guidance. The main concern when looking at property is what will provide the return on investment. Before you commit to investing in a property these are the questions you need to ask yourself.
Will it Provide High Rental Return or Capital Growth?
It will depend on your financial situation whether you prefer a high return on investment through rental or from the value of the property when you come to sell it. Property investors are generally looking for a high rental return, but it is also worth considering the historical growth in property value, to see how much potential there is for capital growth.
Rental payments help you to make monthly interest payments on a mortgage and will cover maintenance expenses. There is never any guarantee that there will be an annual increase in the amount of rent you can charge. Rental return depends largely on how much you invest in the property. The gross percentage can be calculated from the annual rent in relation to the purchase price.
Some areas have shown consistent growth in property values and you should be looking at generating an average of five percent annual income from your property over the first two year.
Whether you intend buying the property just as an investment property or if it is going to be your home, it will pay you to keep it looking nice and to maintain it in good condition. For example, you might need to call a roofing contractor if there is a problem with leaks, damage to the roof or if the present roof is looking dirty.
A clean new roof will show potential renters or purchasers that the property has been well cared for and new occupants will not have to worry about paying a roofing contractor to call in the near future.
What if Renovation and Repairs are Required?
If the property is in need of renovation you will need to contact a qualified roofing contractor, plumber and builder to get an estimate on what the work is going to cost. All those costs should be absorbed by the growth in value, so you need to check historical rises in property value before going ahead with your investment.
A roofing contractor will look at the age of the property and assess the maintenance and materials required to keep up with standards in the neighbourhood. Any improvements or upgrades that a roofing contractor can carry out will increase the energy efficiency and the value of the property. A new roof can add up to forty percent to the value of a home.
Strongly Consider the CLEAR rule mentioned below in the video by Matt Theriault.
What is the Best Location?
Location has to be the first consideration for an investment property. When the demand for local homes rises, property prices also increase. You will be sure to get a higher amount of capital growth from a property in a desirable location.
Find out whether there are any planned regeneration projects in an area where you are thinking of buying a property. When this takes place, it will increase local property prices and there will be more demand for properties to rent.
City homes are often the best investment, because they appeal to young working people who do not want to have to commute and want to rent somewhere close to where they work.
If the property you choose is located close to some good schools, for primary and secondary education, and a college or university, this will ensure that there will be a demand when you put that property back on the market.
Does the Property Have Mass Appeal?
The fluctuations in world economies means that as a property investor or home buyer you will choose a property with the knowledge that at some time in the future it may be necessary to sell it or to lease it.
It is therefore advisable to invest your money in a property that will always have mass appeal, rather than purchase something based only on your own unique set of preferences.
Although there have been some recent changes in the market, the basic rules of investing have not changed. Decide whether you want to go for capital growth or rental return. Find out all you can about the area before you decide on a location. Look into whether you require a roofing contractor or builder to renovate the property and be sure to choose a good property that is going to grow in value.