Investment in real estate is usually a good option for when looking for a return on investment. It can generate ongoing passive income from the get-go and can be a good investment over time if the value rises. You can even use it to start building wealth as part of your overall strategy.
You must however ensure that you are ready to begin investing in immovable property. For one thing, you must put a considerable amount of money down early to start investing in real estate. Buying a new house, a complex, or land could be expensive in Goa. Not to mention the ongoing maintenance costs for which you will be responsible for and also the potential income gaps of time between the tenants.
There is a lot that goes into investing in a new property but having the basics covered will allow you to be ahead of the game and ultimately make a profitable investment decision.
Make payment via cash
Many financial professionals advise against borrowing money to buy any investments. Before you buy an investment property, you must consider this criterion. You must at least be able to manage the mortgage payments, even without the rental income. This when you have to take on a mortgage to pay for it.
Undoubtedly a nice stream of cash flow can be achieved while you rent the place out. There may also be a time when the property is not rented which needs to be factored in while you make the decision to take up a mortgage to own it. If the mortgage payment cannot be afforded without the rental income, it might end up being more a financial burden than a means to create wealth. Moreover, it may cause damage to your credit if you cannot pay the mortgage, which will cost you money in the long term.
You need to plan out your expenses carefully
You have to consider the cost of tax, utilities, maintenance, and repairs when you are buying property as an investment. It is often easier to hire a rental firm to deal with things as repairs, maintenance, and collection of rents. While this would cost you money, the burden of owning a rental property can be reduced. In particular, if you have no time to do everything in the property, it is a good option to use the agency.
All of the fees and other costs must be fully covered for the rental income. In addition, the cost of the repairs on the property must be covered by setting aside the first few months of surplus money. Insurance on the property is also important (and plan for its costs). You must also be prepared to cover any additional costs as situations arise, possibly by setting aside a property sinking fund.
Conduct Proper Research on the Property
You must thoroughly investigate the land deed records before ing forward with the purchase keeping in mind that you plan to sell the property sometime in the future. Find out if new roadways are planned near the property you buy and how that affects the value of the property. Be sure that the property doesn’t have a lien on it. You may also want to look at things like comparables in the area, including whether the area is up-and-coming, and other external factors that might affect the value of the property.
You should be able to take the right decision to buy a property as an investment once you have completed your search. Investments are always a risk, so keep that in mind. You could yield a positive return on your investment, but you can also lose on it as well. Things can change, and an area you think could not actually gain value might, and vice versa.
Some investors start by buying a duplex layout with a common living room, then they stay in one unit and rent then out the other to the other. This is a good way to test the waters, but remember that you are in the same building that your tenant is going to live in.
Also, you want to financially plan to cover the whole mortgage and live comfortably without any additional rental payments at any point in time.
You can consider the purchase of a larger property with more potential income being a landlord and managing an investment property. When you own several properties, buying and managing more properties is easier— and you earn a better return on all the investments.