We all want to save for our future and there is a ton of ways to do that. If you already are getting your company match on a 401(k) or maxed out an IRA, you may want to expand into property. Buying an investment property is a smart move if you do your research in advance and follow these steps.
Buy for the Long Haul
The way to make money on an investment property is to plan on holding the property for the long haul. Property purchases are smart long-time investments but may not be designed for short-term flipping. You will save yourself money if you know this going into your property purchase.
Prepare to hold the property for multiple years so that you can get the added benefit of steady income payments and higher property valuations. Real estate prices have dropped over a short-term basis but property values in good neighborhoods rise over the long-term nearly every time.
Get the Right Loan
It is now more important than ever that you compare home loans at different lenders before settling on one company. It is always smart to compare the rates and loan amounts being offered by different lenders across the country. Compare similar loan products to one another so you are sure you are getting the best deal for the exact loan that you want.
Also make sure that the loan agreed to works for you over time and not just for a year or two. An interest only loan may look real good in the first year or two of your property purchase but the loan can become a big problem after that. Fixed term loans don’t have nearly as many risks as adjustable rate loans and you never want to feed added pressure to sell after a certain amount of time.
Save up a Huge Down Payment
One of the best ways to lower the amount of money that you have to pay on a property each month is by making a big down payment when purchasing the home. A large down payment will reduce both the amount of principal and interest that you will have to pay back on a loan every month.
It also allows you to reap more rental income from an investment property. A greater amount of your tenant’s payments will go right to you instead of to your lender. You can then put that excess income away for times that the property is vacant or needs maintenance. In short, a large down payment increases the amount of equity that you have in a property and reduces the amount of risk that you are taking at the same time.
Overall, if you research solid properties well and can get a great price, property investment may be a great option for you! Good luck!
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