Before you jump head first into the investment property market, there are some essential things you need to know. There’s no denying the fact that property is an attractive investment to make. However, it’s not the guaranteed road to riches many people think. Numerous people have successfully brought home a fortune with real estate investments, but there are also a number of significant risks you need to be aware of beforehand. Your property purchase is not going to be cheap either, so it’s vital you take extra precautions to ensure you make a profit not a loss.

Think with Your Head, Not Your Heart

If you’re buying a home, there’s nothing wrong with thinking with your heart. However, for property investment, it’s your head you need to be listening to. Think of this purchase as a business decision and negotiate logically to ensure you get the best possible price. During the price negotiations, remember that a lower price gives you more scope for making a profit.

Do Your Research

Before you purchase your first investment property, you need to research the market. Think about the type of clients you want to attract and make sure the properties you’re looking at are in the right location. You shouldn’t be looking at it from your own point of view. Approach the decision analytically and base it on financial factors. The purchase you make is all about economics, not emotions.

Calculate the Cost

Deciding on your budget is an excellent place to start, and remember you’re going to need a much larger down payment for an investment property. As well as the cost of purchasing the property, take into account the renovation costs as well. You also need to decide whether you can do the work yourself or need to look for a partner to help you – a Chicago contractor might be able to help, for example.

Financing Your Investment

You might be lucky enough to have savings you can draw on, but if this isn’t the case, you’re going to need to look for finance options. Investment loans are certainly worth considering but be careful to do some research and look at the benefits being offered.

A number of property investors choose to look to family and friends rather than taking out a business loan. There are many factors to consider when it comes to partnering up with family and friends.

The Risks of Buying an Investment Property

As with any form of investment, there is the risk of your property investment bringing a profit or losing you money. If you’re looking to rent your property, there are further risks to consider.

  • The property could sit empty for long periods, making your overall return much lower
  • There may be excessive repair costs that need to be covered if a tenant has caused damage to your property
  • If you need to evict a tenant, there will be additional legal expenses that have to be included

Much like any other form of investment, property investments can go up, and they can go down. If you’re smart with your investment and play it safe, you’re more likely to see a profit.

 

 

 

 

 

 


Leona Zoey
Leona Zoey

Leona Zoey is a freelance writer, she focuses on tech, business and marketing.