PROPERTY INVESTMENT CHOICES
- Written by Melanie Toye, July 20, 2014
If money were no issue, how would you set up your financial future for generations to come?
Property experts suggest, "Everybody needs a home to live. Therefore, property will never die."
You decide to invest in property. The question is, do you buy and rent and use the rental income as regular income or would you prefer to buy, renovate and sell? And use the profits as an income.
Here is some food for thought that may help in your decision process:
Points to consider, if you were looking to renovate and sell:
- Do you have the man power to renovate over a 6-12 month period, take a short break and do it again and again? Or would you prefer to take a somewhat step back and have someone property manager your rentals?
- Timing is crucial in real estate. What would you do if you bought, renovated but it was the wrong time to sell? Your options would include, renting it out. Yet all the hard work and newness of the property would go to waste once a tenant arrived. And more money might need to be put into the property, once the tenant vascates.
- Of course you could leave the property vacant, but the risk of vandalism and property damage from break-ins increases. Another reason why insurance is a must. (Always read the fine print, to ensure everything you want to be covered for, is included).
- The other option would be to sell at a lesser price. Or you could simply watch the market and renovate at a time that would be perfect for the right time to sell. Based on the historic statistics for the suburb, city and State property movement.
- Points to consider if you want to rent out a property:
- If you decided to buy and rent the property out. You could find that you have further opportunities in working lesser hours, or having a new flow of money that could be added to your holiday fund. Investing through property can provide many benefits, not just as an end figure, but as a regular income. This regular income could be worth a whole lot more to you, especially if someone in your household lost a job. The stress of your finances would not have to be a burden.
- If you are unlucky and have a bad tenant that cause's major damage to your property. The bond they initially paid may not even cover a quarter of the costs you now have to pay to fix. Resulting, in further lost months of rental income, due to renovations. And once the next tenant moves out, it could happen all over again.
- Having a property manager, manage your property can help reduce the risk.
- The other risk is, if you have a property that is not rented for several months throughout the year. You can expect a week to four weeks between a tenant leaving and finding a new tenant. What you may not expect is when the location you bought your investment, is filled with multiple properties for rent and it now becomes a competitionbetween your property versus the neighbours.
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