Investing in property for beginners may be a bit intimidating as it is their first step onto the property market. However, beginners need to remember that the only difference between a beginner and the seasoned is experience.
Therefore, investing in property for beginners involves learning as well in order to become a successful property investor over time.
Any investing in property for beginners involves the ‘why’. It is not just about investing in a property but it involves the bigger question as to the purpose of the investment. If a potential investor is clear on goals, which may be to own a home, then the rest of the process becomes easy. Beginning from the selection of the right location, the type of property to be purchased, the size of the property, and the mortgage lender and the plan, the potential investor should consider all the various aspects carefully in order to successfully invest in a property.
Apart from the factors relating to the property itself, the investor needs to consider the net worth or finances, such as the current income, the sources of income, the sum available for investing, credit scores, debts, taxes etc. As an investor, you need to figure out the amount of money you are left with at the end of each month, the debt and the amount of taxes that you will be required to pay once you own a property.
Another factor is to determine your current purchasing power. It is crucial to undertake the correct evaluation of your purchasing power as this will assist you in setting up your property investment decisions. It will assist in deciding on the right type of property and the location for the property as well as the size of the property appropriate for you according to your ability to finance the investment. This is an essential step to drafting a successful property investment strategy.
Once the purpose of the investment, net worth and purchasing power have been figured out, the next step towards property investment is to identify the right investment strategy which is according to your specific investment needs and goals. It is important to know your net worth, financial status and purchasing power in order to choose the right investment strategy. If you are not aware of your purchasing power, you will not be able to finance your property investment in the best way. You should be clear on what funds you are going to use for the down payment and whether these funds are liquid cash, the amount of money you plan to put toward your financing strategy, and the type of loan which best suits your current and future financial situation. This need to be drawn out to enable you to invest in the right type of property. They will indicate the type of properties you are qualified to purchase.
Once you have all the information with you, you will be able to decide whether you should buy an average property, homes that need to be renovated or whether high quality homes are more suitable for you. These will also provide you with the information as to whether you should invest in property through a real estate agent or buy one at an auction. In case you are restricted on resources as a first-time buyer, then auctions may be a good option for investing in property for beginners. There are a number of advantages with buying a property at an auction as there is no real estate agent involved in the process and you can directly access the property, though the auction house may be involved in the process. This saves on the real estate agent’s fees and other related charges. Moreover, buying a property through an auction house is a transparent process and the whole process takes place right inside the auction room and you will know that you are quoting a price just above the price quoted by your competitor.
Above all, it is necessary that you do not rush through the buying process as beginner. Investing in property for beginners includes a careful evaluation of all the aspects related to property investment which takes time and due diligence. As investing in property for beginners involves a lot of knowledge and experience in order to turn the investment into a long-term success, you really need to understand the market and how it works, like how properties hold their value for resale, location factors and so on. Even if you are buying a property for using it as your home, you may want to consider its resale value. Since investing in property for beginners is a big decision and requires commitment, it is worth investing time into the process before moving ahead with the investment. You need to see a number of properties before concluding on the one which you believe is the best according to your requirements.
It is also essential that you know the market on your own and not just rely on the real estate agents to make the decision for you. While the assistance of real estate agents for investing in property for beginners is definitely a plus, you are the one who is going to invest, and in the case of investing in property for beginners, it becomes even more important that you know the market you plan to purchase in. It is a good idea to know the value of properties in your target area before making the commitment. This will help you ensure that you make good decisions in order to be successful.
As a beginner, you will want to invest in property in a way which minimises risk variables. So, investing in property through Real Estate Investment Trusts or REIT is a good option as it allows you to invest in real estate without actually getting the physical property. Akin to mutual funds, you invest in companies which invest in real estate and pay high dividends to investors. One of best options for Investing in property for beginners is through publicly traded REITs which you can purchase through a broker.