Nobody has ever entered the world of property investments and regretted spending too much time on planning and preparations. You can never be too prepared, but don’t let that make you gun-shy either. Eventually, you’ll have crunched all the numbers 100 times, you’ll have shopped around and you’ll know the neighborhood, and you’ll find a place that meets most of your criteria.
You don’t want to wait around for years trying to find something that’s one hundred percent perfect because that probably won’t happen. With any investment in real estate, there are going to be some surprises and you can’t plan for everything – but why not go into it with the best plan that you can?
You can’t plan specifically for these surprises, but you can try to incorporate them into your strategy so that if they do happen, you’re at least semi-ready to deal with them. Here’s our guide to planning your property investment so that you’ll be ready for just about anything
Deciding if real estate investing is really for you. You know your strengths and weaknesses, and your own tolerance for risk. Make no mistake, there is always risk involved with any investment, otherwise there wouldn’t be any returns!
Making an assessment of your current situation.This means taking account of your assets, liabilities, your credit standing, and how much you can really afford to invest at the moment. Many first-time property investors can get over in over their head, especially by not leaving some breathing room in terms of money to deal with last-minute things or unexpected bills that pop up.
Decide what your goals are. Whether you’re looking for long-term capital gains, or rental income, will have an impact on how you go about this entire process. It’s wise to speak to an accountant so that you can understand the tax implications as well, since not all income is treated equally. The few hundred dollars you spend to consult with a skilled accountant will likely end up saving you thousands down the road.
How actively do you want to be involved? Do you want to be the person your tenants call when something goes wrong, or do you want to hire a property management company? Being actively involved means you’ll save a lot of money, but you’ll also be a lot busier. Properties offer both active and passive investment opportunities, which one is right for you? That’s up to you to decide.
Do you have experience? If you have experience in the trades, you’ll save a fortune on repairs. If you have experience in accounting, you’ll be able to organize everything perfectly. If you are a painter, you’ll save some money there. Self-assess your own skills, because you’ll be able to leverage them in this new project, especially if you’re just getting started. Every little bit counts, and can be the difference between getting a nicer property or not.
Start researching the marketplace. A good real estate agent can help you with this, and you may want to bring along a contractor that you trust as well. If a place is going to need a lot of work, you’ll want to know that asap.
Plan a meeting with your banker. Find out exactly what you can afford to invest. If you’ll be borrowing money from the bank to invest in property, find out what happens if things go sour. Make sure you aren’t going to lose everything, and don’t risk more than you can afford to lose. In general, being a landlord has proven to be a great earner over the years, but if your area gets hit with financial hardships, will that sink you?
Try to set things up in a way that you’re protected, and that if your tenants skips town and your property sits empty for a few months or more, that you can still afford to keep paying back the loans.
Always give yourself some breathing room. You never know when you’ll need to buy a new roof, and a new furnace, and a new set of steps. Sometimes, this can all happen at once and if you don’t have the cash reserves to pay for it, these types of expenses can be devastating.
When you’re calculating your mortgage or loan payments and the amount you’re going to charge tenants for rent, understand that you’ve also got to make it worth your while, especially if you’re paying for repairs every now and then. Some months will be a wash, some months you’ll lose out, but you’ll always be gaining equity in your property. Planning for the unexpected can sound like an oxymoron, but it’s not.
Always consider quality and safety. If you’re building or renovating, don’t forget about safety either. There’s more to investing than just money, and ensuring that the company you’re working with puts the safety of its employees along with proper building procedures at the forefront, you won’t have to worry about any unexpected accidents either during the building process, or down the road.
For example,building a home in a congested area raises certain safety concerns that don’t exist if you’re building it out in the country. Using quality materials that are meant to last can also play a big role in the design of a property. Keeping costs down is always important, but make sure you’re weighing the pros and the cons. Do you plan to keep this property for a long time? Save yourself some headaches down the road and don’t just go with the lowest bidder.
Here’s a quick checklist of things to keep in mind, some of which were discussed more in-depth already but it never hurts to have a quick refresher.
Create a realistic budget, and leave room for the unexpected.
Speak to professionals including accountants and lawyers.
Deal with companies that put an emphasis on quality.
Don’t cut any corners that might sacrifice safety.
Choose a level of risk that suits your age, financial position, and tolerance levels.
Leverage your existing skills and relationships.
Optimize your property to appeal to the types of tenants that you want.
Decide how actively you want to be involved in the day-to-day.
Diversity your investments. Real estate is a key part, but it’s not the only piece. msvanovich
Nobody has ever entered the world of property investments and regretted spending too much time on planning and preparations. You can never be too prepared, but don’t let that make you gun-shy either. Eventually, you’ll have crunched all the numbers 100 times, you’ll have shopped around and you’ll know the neighborhood, and you’ll find a place that meets most of your criteria.
You don’t want to wait around for years trying to find something that’s one hundred percent perfect because that probably won’t happen. With any investment in real estate, there are going to be some surprises and you can’t plan for everything – but why not go into it with the best plan that you can?
You can’t plan specifically for these surprises, but you can try to incorporate them into your strategy so that if they do happen, you’re at least semi-ready to deal with them. Here’s our guide to planning your property investment so that you’ll be ready for just about anything
Deciding if real estate investing is really for you. You know your strengths and weaknesses, and your own tolerance for risk. Make no mistake, there is always risk involved with any investment, otherwise there wouldn’t be any returns!
Making an assessment of your current situation.This means taking account of your assets, liabilities, your credit standing, and how much you can really afford to invest at the moment. Many first-time property investors can get over in over their head, especially by not leaving some breathing room in terms of money to deal with last-minute things or unexpected bills that pop up.
Decide what your goals are. Whether you’re looking for long-term capital gains, or rental income, will have an impact on how you go about this entire process. It’s wise to speak to an accountant so that you can understand the tax implications as well, since not all income is treated equally. The few hundred dollars you spend to consult with a skilled accountant will likely end up saving you thousands down the road.
How actively do you want to be involved? Do you want to be the person your tenants call when something goes wrong, or do you want to hire a property management company? Being actively involved means you’ll save a lot of money, but you’ll also be a lot busier. Properties offer both active and passive investment opportunities, which one is right for you? That’s up to you to decide.
Do you have experience? If you have experience in the trades, you’ll save a fortune on repairs. If you have experience in accounting, you’ll be able to organize everything perfectly. If you are a painter, you’ll save some money there. Self-assess your own skills, because you’ll be able to leverage them in this new project, especially if you’re just getting started. Every little bit counts, and can be the difference between getting a nicer property or not.
Start researching the marketplace. A good real estate agent can help you with this, and you may want to bring along a contractor that you trust as well. If a place is going to need a lot of work, you’ll want to know that asap.
Plan a meeting with your banker. Find out exactly what you can afford to invest. If you’ll be borrowing money from the bank to invest in property, find out what happens if things go sour. Make sure you aren’t going to lose everything, and don’t risk more than you can afford to lose. In general, being a landlord has proven to be a great earner over the years, but if your area gets hit with financial hardships, will that sink you?
Try to set things up in a way that you’re protected, and that if your tenants skips town and your property sits empty for a few months or more, that you can still afford to keep paying back the loans.
Always give yourself some breathing room. You never know when you’ll need to buy a new roof, and a new furnace, and a new set of steps. Sometimes, this can all happen at once and if you don’t have the cash reserves to pay for it, these types of expenses can be devastating.
When you’re calculating your mortgage or loan payments and the amount you’re going to charge tenants for rent, understand that you’ve also got to make it worth your while, especially if you’re paying for repairs every now and then. Some months will be a wash, some months you’ll lose out, but you’ll always be gaining equity in your property. Planning for the unexpected can sound like an oxymoron, but it’s not.
Always consider quality and safety. If you’re building or renovating, don’t forget about safety either. There’s more to investing than just money, and ensuring that the company you’re working with puts the safety of its employees along with proper building procedures at the forefront, you won’t have to worry about any unexpected accidents either during the building process, or down the road.
For example,building a home in a congested area raises certain safety concerns that don’t exist if you’re building it out in the country. Using quality materials that are meant to last can also play a big role in the design of a property. Keeping costs down is always important, but make sure you’re weighing the pros and the cons. Do you plan to keep this property for a long time? Save yourself some headaches down the road and don’t just go with the lowest bidder.
Here’s a quick checklist of things to keep in mind, some of which were discussed more in-depth already but it never hurts to have a quick refresher.
Create a realistic budget, and leave room for the unexpected.
Speak to professionals including accountants and lawyers.
Deal with companies that put an emphasis on quality.
Don’t cut any corners that might sacrifice safety.
Choose a level of risk that suits your age, financial position, and tolerance levels.
Leverage your existing skills and relationships.
Optimize your property to appeal to the types of tenants that you want.
Decide how actively you want to be involved in the day-to-day.
Diversity your investments. Real estate is a key part, but it’s not the only piece. msvanovich