There are many options a potential investor can choose to build their wealth. New investors usually go for mutual funds that also double up as insurance. Some go for fancy jewelry and precious stones. And of course, there’s always the stock market.
But if you want to truly build wealth, investing in a property is a sure path. So if you’re of the mindset of smartly investing in real estate, here are some guidelines.
Find the property that best suits your investment purposes.
What would be the basis for buying a property to invest in? Browsing online will bring you lovely pictures and scenery posts by real estate companies to lure you to have an ideal, scenic, Instagram-worthy home that’s the desire of any tenant’s heart.
While curb appeal is important, there are, however, certain realities that need to top your priority list in purchasing your new investment property. In selecting a property, make sure that the location is situated in a safe and friendly neighborhood, in close proximity to the workplace or are surrounded by commercial areas that can make everyday life convenient.
Consider the property attributes such as size and availability of amenities. When house-hunting, make sure that the basic amenities such as heat, light, parking and laundry facilities are readily available.
Make sure you’re liquid.
The first consideration when deciding on making a property investment is to look at your cash flow. With the resources that you have on hand, is it enough to maintain to pay off your mortgage loan and still be able to live comfortably?
Make sure that your financial and investment portfolio is healthy enough that you’ll be able to sustain mortgage payments even in the months when there won’t be renters occupying your property.
A wise reminder to take to heart: don’t spend money that you’re not earning, because doing so puts your dream investment further and further out of reach. Whether it’s a first time home to live in or an investment property, be sure that you have the resources for your mortgage.
By checking your cash flow, you’re trying to prevent a scenario wherein you’re siphoning all your funds into your mortgage, causing you to live paycheque-to-paycheque. Remember, you’re doing this to build your wealth, not constrict your way of living.
Be properly informed about mortgages and the investment property market.
At this point, you should be familiar – if not knowledgeable – about what a mortgage is. You must also be aware that mortgage lenders will want to confirm your income and employment as these are essential factors towards the approval of your mortgage loan.
There are also other factors to consider about your mortgage. Do you want an open or closed mortgage? Would you prefer a conventional mortgage or a high-ratio? Or a fixed-rate or a variable?
Be attuned to what the outlook of the real estate market is and if it’s complementary to your cash flow. The property market may be indicating that home prices will take a dip towards the winter season when fewer people are buying, however, will you be ready by then?
Find a location that’ll be attractive to renters and will yield the best passive income.
Convenience and accessibility are, of course, your primary considerations when selecting a property to invest in. Once you decide to rent your property, be certain the location of your property is accessible to public transits and local amenities.
Hire a reliable mortgage broker.
Even with all the information about the real estate market and mortgage loan in your arsenal, it’s still best to consult with a mortgage broker to help you navigate the process involved with buying an investment property.
Having the guidance and knowledge of a reputable and experienced mortgage broker by your side will help the process of purchasing a successful investment property.