Is It Time To Invest In Property Again?
Who’d be crazy enough to buy into property? After the tremendous, devastating crash of 2007 which drove the collapse of the sub-prime, mortgage and credit markets, many investors were so badly burnt that it seemed the property market would never recover. Indeed, the bursting of the housing bubble was called ‘the most significant risk to our economy’ by the US Secretary of the Treasury. So has anything changed, and is it safe to re-enter the world of property investment?
Although there are arguably always those who can invest wisely and profit even in the direst economic situations, the majority of people don’t have the capital to buy up cheap properties and hold out until the market fully recovers. However, there are strong signs that the US property market has bottomed out and is beginning a period of recovery as analysts have noted the halting decline of property values and the increase in demand, driven by low borrowing costs.
For the keen investor, this presents an opportunity to enter the market. If you’re looking to purchase your first investment property, read on for essential tips.
Don’t rush into it. Buying-to-let might seem like an attractive investment option in a market ruled by low mortgage rates, uncertainty on the stock market and low rates of return on other forms of investment, but you still need to be ready for such a responsibility. A recovering property market means that interest rates will rise. Can you afford increased mortgage repayments? Could you bear the costs if your property was not let for a long period of time? Can you afford the risk of a failed investment?
Spend time finding the best mortgage. The greatest advantage you have as an investor is that you aren’t necessarily subject to intense time pressures. Check with banks, credit unions, and lending institutions and consider employing a specialist mortgage broker.
Location, location, location. Location is one of the most important factors in purchasing a property and this is especially true if you’re purchasing for investment. You’re looking for both current appeal and potential growth, because your property needs to be let to help you sustain the mortgage repayments, but it also needs to increase in value to make it a worthwhile investment. Researching the market involves identifying key areas with access to transport, schools and parks. Think about your future tenant and what they would require from a property.
If you’re a real estate agent, you’re accustomed to identifying these areas but if not, getting the advice of a trusted real estate agent can be invaluable and help you narrow down your search for a potential area. You can also select a list of agents and ask what they are able to offer.
Above all, remember that you’re buying a property for someone else to live in, so it doesn’t necessarily matter if you want to live in that area – only that it is an attractive location with the right features and access to transport.
Know what you want, but keep an open mind. The advantage of not living in your investment property is that you can look further afield if another town presents itself as a better investment. Look for a good rental yield and a strong management company, otherwise if you prefer to manage the property yourself you’ll need to make sure that you can access it easily.
With strong indications that the property market is improving, it could be the perfect time for you to purchase an investment property.