If you’re interested in diversifying your investment portfolio by purchasing property, you might be excited to jump right into the market and get started. However, if you want to find success in the venture, you’re going to want to ensure that you take this business seriously and make the right investment decisions. So to help you eventually reach your investment goals in this arena, here are three tips for those just starting out with investing in property.
Go Slow At First
For those who live by the phrase “Go big or go home,” you may be wanting to begin your foray into property investing by making a big purchase. However, this is going to be the wrong move for many people. To give yourself the experience you need to start making bigger investments, Kayleigh Kulp, a contributor to U.S. News and World Report, recommends that you start off small. This means that rather going straight for an entire apartment complex, maybe you go for a duplex or other single housing unit. By doing this, you’ll be able to get your feet wet in property investing while still being able to make some money. Once you’re comfortable, then you should start looking into bigger investments with more risk involved.
Be Careful With Your Debt
Tim Parker, a contributor to Investopedia.com, shares that while some big investors have debt as an integral part of their portfolio, if you’re just starting out with investment properties, debt is something that you’re going to want to be very careful with. In general, the average person and investor should try to avoid getting into too much debt. With this in mind, if you’re considering getting an investment property but you’re still trying to pay down other debts that you’ve acquired, you may want to do those first before you start taking on more property debt.
Understand All Costs
Just like with buying a piece of property for yourself, many people overlook what the true cost of ownership and investment could be for them. According to Dean Graziosi, a contributor to the Huffington Post, it’s important to remember that you’ll need about 20 percent for the down payment before anything else.
In addition to this, you’ll also be on the hook for the mortgage and any repairs or maintenance costs, regardless of whether you can fill the property with a tenant or not. Whether someone lives or not in a house, things like dampness, moisture, and wear can show up in it due to the different weather conditions it faces. It could require you to hire concerned service providers like roofers, pest controllers, or Professional Mold Removal experts, depending on the wear and tear suffered by the property. Besides these, things like insurance, property management, and marketing costs could need to be factored in as well. So, before you get in too deep, make sure this is an investment you can actually afford.
If you’re considering getting into investment properties, use the tips mentioned above to help you find your first successful venture.