Wednesday, December 28, 2016 / by Nicole Solari
Tips for Your Investment Property
You likely invested in a property because you’re intoxicated by the beauty of the real estate business. There are so many like you, but only a few manage to truly gain something from investing in property. It can be a lucrative investment if you know what you’re doing, rather than diving in blindly.
Still, if you’ve ended up with a good property on your hands, but your plans for it have started to look less promising than you did before you invested, then it might be time to reconsider your plans. Consider some of our advice, and maybe you can make a real profit from your property.
Make sure you can pay for it, or borrow only what you can handle.
Borrowing far too much is a mistake that far too many people make when entering into property investment for the first time. When you buy a property with the purpose of letting it out, borrowing can be so tempting, because you’re thinking about the returns you can hope to achieve from doing so. However, things can quickly go wrong if you borrow without any plans of making enough money to pay it back.
Maybe that all seems obvious, but it’s something that so many property developers neglect to consider when they borrow, and it’s the thing which undoes so many of them. Of course, if you borrow wisely, and on the right property, it can be a very smart move. Think about the returns before you borrow or invest at all. If they look promising and fast-paced without the property value having to rise at all, then it could be a wise move. If not, then it could be a risk which massively backfires.
Selling for a good price in this economy.
The aftermath of the recession is still strongly felt across all industries and all businesses within those industries, but there is no doubt that the business world of real estate was hit much harder than most. It can seem impossible to find a buyer in this current state of affairs, so figuring out how to sell your property after investing a lot of time and money into it can seem not only daunting, but incredibly infuriating.
It doesn’t matter what governments or news media say about the improvement in data concerning the house market, because all that really matters - to you, at least - is house sales, and they’ve shown definite signs of struggling over recent years. What does this mean? It means houses, for the most part, are being priced far too highly. This is the main piece of advice you need to take on board: price it sensibly.
This is all about psychological tactics. If you have a house on the market for months and it isn’t selling, people might start to devalue it in their minds, as they wonder why it won’t budge at all. Alternatively, if you plan before you put your property up on the market, and choose a price which more closely resembles the rough price range of properties such as yours in the area, potential buyers might become more anxious and much more likely to place an offer. If people feel like they might miss out on their chance with the property, because it won’t be sitting around months, then you’re likelier to finally catch a sale, even with the real estate business struggling as it is. There are still people who need to buy houses. Give them an offer they can’t refuse and they won’t refuse it.
If you’re buying to sell, you might want to consider trading instead of selling.
When you sell a property, no matter how juicy those capital gains might look, you’re going to have to say goodbye to a good third of that chunk of money in the name of taxation. Maybe you knew that, or maybe you didn’t. Seems unfair, doesn’t it? Well, there are clever ways you can get around it. A 1031 exchange allows you to move the capital gains from the property you’re selling to a new property that you have purchased. It seems a little peculiar, I know, but it may help you one day in the future. You can sell all your properties for a huge, lump sum of cash, and, maybe, you’ll have saved huge amounts on taxes in the process.
You might not have huge, long-term goals right now, but, even so, it makes sense to save money until you’ve had some real experience in property development and you know which investments work for you and which don’t. Save on capital gains tax until that day, because you don’t want to be losing huge amounts of money in these early investments. Of course, the property for which you exchange your old one must be of equal or greater value than the first one, and all the money must be used on the new property.
This is a good thing, however, because what you want is to keep investing in the next big thing until you start making huge leaps forward in the property world and seeing where all the good returns in investment lie. It’s all about feeling the market and watching current trends, because who knows where they’ll go next?
Curb appeal can make all the difference.
In a street full of properties which might all be very pretty and pleasing to the eye, but which all look incredibly similar, what’s going to make yours stand out to potential buyers? You have to start thinking about unique selling points if you want to… well, sell your property. For example, an extravagant and beautifully-arranged flower garden in the front yard of your property will most certainly catch someone’s eye if it truly stands out from all the other houses.
There’s so much competition on the market, so the best advice for your property investment, whether you’re looking to let or sell, is to gauge the market first. Think about your returns, and don’t be afraid to change your plans if the market doesn’t move the way you thought it would.