There are a lot of good investment vehicles out there and a lot of them are based on the financial markets. For people that are jittery about the financial markets, property can seem like a good way to invest their money. And, it can truly be an investment strategy that pays off. You do, however, need to have a good eye for a bargain and should be willing to pull up your sleeves and do some work.
You need to have a good idea of what you are doing and should look at property investments, in general, as a long-term investment. In order to make money from property you will generally be looking at holding on to it for at least ten years. There are two ways of making money from property – by buying it to rent it out or by buying it in order to fix it up and flip it.
Buying a Property to rent it out:
You need to choose a property that will be good for your prospective tenants and not necessarily something that you like unless you plan to live there later. You need to vet your tenants properly and get a proper lease agreement in place before they move in. It will pay you in the long run to have the lease agreement drawn up by an attorney. You may even consider letting the property through a management company – they will take a percentage of the rental but they will also handle all the correspondence between you and the tenant and will also collect the money. They will also advertise the property for you and vet possible tenants. Make sure that you make a list of any breakages before the tenants move in and inspect the property thoroughly before they move out.
Buying a Property to flip it:
This is something that was very popular until the global economy went bang. People suddenly found themselves having properties that were overcapitalised and had to sell at a loss. With the global economy picking up again, this is becoming a popular idea again. The main rule here is that you have to know what you are doing and have to do your homework properly. Unless you have identified an area that is due to become very popular, house prices are generally capped at an average for the neighbourhood.
Check what similar houses in the neighbourhood have been selling for. No matter how much you improve the house, you will find that the neighbourhood prices will dictate how much you can get for it. Here again, it may pay you consult an expert for advice. Flipping a house may require that you do the cleaning and painting yourself in order to maximise your profits. Ensure that you are willing to go the distance.
Buying property for either reason has its own pros and cons. Property can be a great investment if you do your research beforehand and keep your expectations realistic.