Four Useful Guides to Picking a Winning Investment Property For Buy and Hold Rental Properties

Much as we would like to stay objective in our investment dealings, we tend to gets emotional and we can fall sway to charms of owning a property in an area we love or maybe you have always wanted to own a property in that area, at that specific price.

 

It looks perfect. Something about it just pulls you in, and you want to put in your portfolio. You have to make it yours – your dream property fulfilled. These are the thoughts that go through our heads and often lead us to dream our way into an investment.

 

Sometimes gut feelings are right. They can lead to good decisions. They can also lead to very bad decisions! Rather than paying attention to how you feel, there are objective guides that will help you know if an investment property will bring you a solid stream of passive income or not.

 

Objectivity is not something often talked about amongst investors. The ability to be objective when so many decisions are made from emotion is a very tough skill to learn. However, I want to make it simple by focusing on being objective and simply going after deals based on a few simple questions.

 

Four Signs Your Invest Property Is a Winner!

1. The property rental prices make sense.

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At the end of the day, what you’re able to reasonably charge for rent is what will generate positive cash flow and make your passive income. When you research and compare rental rates in your area, will you be able to fairly charge your tenants while still making enough of a profit after loan repayment,maintenance charges, maintenance and other expenses? If what you’re able to charge doesn’t make sense in the scheme of things, the property may not be a good investment much as you love it.

Take note that at times, a great property management company can absolutely out-perform the marketplace and can make a difference in rent performance.

2. Site and property inspection.

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Always have a site and property inspection — even if everything looks great, sounds great, and seems great. You don’t want to own a property with unexpected problems that can cost you thousands in repairs. Nor do you want to hold onto a property wherein you have problem renting, frequent vandalism and break-ins in your property or in a notorious area for crimes. Sometimes, crime is evident. The presence of abandoned properties and massive vandalism in the area are common red flags signal. Obviously, safety is a big draw for tenants whereas crime is a repellent. 

 

3. Minimal repairs and renovations are required.

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It’s not likely that your investment property will be perfect n a secondary market. It doesn’t have to be! There will be renovations you’ll want and need to make to create property value and draw in tenants. That said, certain properties will demand more work than others. Some bad, dated aesthetics can be easily fixed —dirty walls, for example. Dated bath fittings and fixtures, plumbing and leaking issues are a little harder to salvage. A property that is extremely, unattractively dated, is generally more difficult to be tenanted or sell to future buyers.

 

When considering a property, remember: You’re not buying its potential. You’re buying it as it is. You have to weigh whether or not the cost will be worth it and whether you will still have positive cash flow after the repairs cost.

 

4. The neighbourhood is good.

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Remember, many of the factors that make a property a good investment have nothing to do with the property’s own merits. A good neighbourhood is paramount to the success of your investment. Not only does that mean little things like good neighbours and a lack of eyesore properties, but it also means things like proximity to attractive amenities and places. Colleges, medical canters, areas with shopping and businesses — these are bonuses that can all attract a larger pool of tenants.

This is where having someone with real market insight is invaluable. They’ll have an understanding of the nuances in the market that data may not clearly reveal — like which neighbourhoods are up-and-coming and which ones are on the way down due to notorious or unfavoured tenants.

These are simple tips and often they are overlooked for it is very easy for us as people to be impulsive, emotional and irrational — well, it just made sense to remind us all to be objective when investing.

How objective are you as an investor?

By | 2017-02-22T17:03:09+00:00 August 4th, 2016|Blog & Article|0 Comments

About the Author:

HongThang have been actively involved in the real estate and property development industry. After completing her tertiary education locally in University Malaya, and her second degree in Louisiana State University in the USA, she have been working in 7 different public listed companies in property development. Her work experience spans all areas of the business, from pre-development stage in land sourcing, feasibility studies, project work processes, sales administration, marketing and project management.

In her personal capacity, she is also an avid property investor, having made several profitable investments through the years. Her investments have reaped returns from minimum of 25% up to 400% in capital appreciation.

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