5 Tips on Buying a Property to Rent

Buying a property to rent might be something you want due to the fact that the real estate has created a lot of wealthy people out there.

You might also think that purchasing a property for rental could be a real investment for the future. However, it could drown you into thousands of dollars of debt and other issues when you do not have enough preparation. So, in this article, we are going to show you 5 important tips before buying a property to rent. It is not impossible to be an estate tycoon in the future, right?

Make sure it is for you

When you are looking for the property to buy, you will see a lot of things in that house. For example, the clogged toilet, a toolbox, or drywall would need to be repaired one day. You need to ask yourself if you will be okay when the issues come and you need to fix it. Some homeowners would repair it themselves in order to save the cost. If you are okay to be a handyman in your own property then you may be suitable to be a landlord.

Pay down your debt

Investors who have been around for years might bring their debt along for their portfolio. However, if you are a beginner and this is your first time to purchase a property to rent then you should not do that. So, if you have medical bills, student loans, or you simply have kids who need to attend college next year then it is better for you to focus on those things first. It is not wise to make payments when you do not have cash.

Pay the down payment

Generally, the investment properties will need a bigger down payment than other owned properties. It is supposed to make the approval requirements with a better stringent. If you can only put 3 percent for the hone you are currently living in, it will not work for an investment. Since mortgage insurance is not available for a rental property, you need to put at least 20 percent.

Higher interests rates may haunt

You may get a low-interest rate right now. However, the interest rates when it comes to the investment property would get higher than another traditional mortgage. Keep in mind that you need a low payment for a mortgage so you can still enjoy your monthly profits too.

Calculate the margins

For your information, the Wall Street firms that purchase distressed properties will need for returns at least 5 percent. They still need to pay their staff too. This is why the individuals will make at least 10%. 

Also, you need to make the estimation for maintenance cost at least 1 percent of the annual value of your property. Other expenses may include insurance cost, the possible fees for homeowners’ association, taxes of your property, and other monthly expenses such as landscaping and pest control. So, those are things you need to consider before buying a property to rent.

Best Countries to have Property Business

When it comes to international property business, there is one thing that you should know. The thing is, it can be tricky when you wish to engage to the business which involves the international properties since the situation in each country and the policy in each of them would be likely to be strikingly different. Therefore, it is best to figure out the countries which are most favorable to start your business. These countries below are the best places for you to start your investment in property.

Best Countries to have Property Business
  • Ireland

The first country that you should visit when you wish to start a business in property is the country which is located near the United Kingdom and its name is the Republic of Ireland. Across Europe, most people would agree that this country, which used the shamrock plant as its national symbol, is the best place to start investing at a property. Although interesting, this island country is actually a pretty tricky place when you wish to invest since there are several policies that are beneficial as well as the policies that are restrictive. Well, its prices in real estates are climbing and it is a good thing for investors. However, it has high rental yields (6.64%) and rent (USD 2,077). 

  • Barbados

Now that we have mentioned one of the countries in Europe, let us find another country which is from another continent, shall we? Instead of Europe, Barbados is located in the Caribbean area and it is an island which used to belong to the British. Now, it is a beautiful country and it is visited by numerous tourists annually. Well, this one is one of the best countries for having property business since its rental yields and the tax offset for its income are surprisingly low (5.48% for rental yields and 7.5% for rental income tax). However, it can be difficult to start your business here since the government requires you to have a license from the Central Bank to invest in property there.

  • Indonesia

The next country we mention here is the country which is also known to possess more than a thousand islands and volcanoes and its name is Indonesia. Okay, although it has a lot of volcanoes, most of the populations actually live in safe areas and it is not as dangerous as you think! Also, the country is actually a good option to start investing in property since its high rents are pretty high (USD 2,486); you can gain a lot of profit in this country! Also, the rental of this country is pretty effective at about 8.61 percent. Unfortunately, though, this country also has a downside, which is its high tax for rental income. 

  • Philippines

This country is located right above the previous one that we mentioned. It is true; the Philippines is located at the north of Indonesia and they are relatively similar when it comes to property investment. The country is very profitable since the rental yield is high (6.13%), the rent prices are appealing (USD 2,422), and the tax rate for rental income is low (4.06%). Therefore, it is the best country for having property business.

Real Estate Business: How to Start

This article will discuss several things you need to know before starting real estate business. These things are necessary to make your business run well and it is no trivial thing since 87 percent of agents who operate in the real estate business fail in the first five years after they start. It is true; this is not the thing for those who are not strong enough! However, there are several ways you can follow to make your effort easier.

Real Estate Business: How to Start
  • Have an excellent plan

The first important thing to do before starting a business in real estates is that you need to have great planning and it is your priority. Planning like a boss is the thing you would definitely need since this is a business and having a business plan is the thing to have if you wish to outperform the average salary of most realtors. To make one, you will need to have a financial goal that is crystal clear and make sure it is important for your life. Instead of thinking tactically (e.g. the amount of commission you would wish to receive), strategic thinking is the thing you need and you should figure out several things, like how you would retire at 65, what you want to feel in your life, and paying your children’s education.

Also, you need to align the plan of your real estate business and start figuring out your biggest asset. Identify the things that make the business you own shinier than its competitors. You can also understand the values of your business, as well as the principles that you hold. 

After you have understood the things mentioned earlier, the next to do is to have a marketing plan with consistent quality. Obviously, you would have passed the marketing license exam when you were still in the school, have you not? Then, it is time to prove it and pick the best brokerage for your business! Also, establishing a solid database to those within your sphere of influence is important. Strategically thinking about the market dynamics is also the thing you need to do and you also need to be able to offer the values of your business to your customers so that you can drive down your marketing in the future more easily. 

  • Understand the ways to survive

Now that you have understood the plans to establish your business, it is time to ensure that it stays alive for the next five years and more. Since we live in the digital era, having a website is a good way to make your business run well since most potential buyers would look for the options available on the internet. Make sure that it adheres to the SEO and it has an attractive look. Well, it might be a bit expensive, but it is definitely worth it. 

Also, you need to nurture the leads since they will need to be contacted back once they call you. If you wish your business to run properly, then, you need to understand the importance of a follow-up system. Beating your competitors is way easier when you are always there when needed and that is one of the tips of having a real estate business.