» Autor: Kumar M

When looking to invest in property it’s always important to take a structured approach to ensure you get only what you are looking for.

Step 1 - Research Research Research :

This is possibly the most important aspect of any investment decision. When talking about 'researching' a potential investment, what it means is to do all the necessary homework to find out if the investment is right for you and if it will provide the return you're looking for.

Sometimes it is tempting to overlook research and maybe follow a tip from a friend on a potential investment. Many people also don't do research because they don't know where to find the required information and so they may make a blind investment, hoping on good returns. Even worse, they may put off making the decision (to invest or not to invest) and stay stuck in procrastination while the asset starts to show strong growth.

So what needs to be researched before investing in property?

Location - such things as the population, main industry, main employers, future investment in infrastructure, tourism, local universities.

Property prices - average, median, recent sales, potential rental returns, previous and predicted growth.

Tax and ownership laws – country and state laws, occupier/investor tax rates.

There may be more areas you need to research depending on your situation but the main objective here is to carry out the research to a level you are comfortable with. You can never do too much research.

Thorough research will give you peace of mind to make confident investment decisions.

Whatever you are trying to achieve, someone has already done it before and the information is out there. It may be in books, newspapers, special reports, published on the Internet or available from real estate agents. You can find the information you need to make a confident investment decision.

Step 2 - Know your Numbers :

Note: This step primarily deals with rental returns and does not take a property’s annual appreciation or depreciation into account.

Before investing in property it’s important to do the numbers to know

What you can afford to purchase.

Purchase and ongoing upkeep costs.

Potential rental returns

Monthly cash surplus or deficit

Once you know all of these figures you can then decide how much you can afford to spend within your budget, what rental return you’re looking for and whether you will gain a monthly cash surplus or if you will need to contribute towards its monthly upkeep.

So what are the common numbers to know and calculate?

The Purchase Price

Purchasing Costs – items such as Stamp Duty, legal fees, real estate agents’ commission, legal fees.

Rental Income – If the property is rented to tenants, how much rent can you charge?

Ongoing Costs – Management Fees, mortgage repayments, repairs and maintenance, letting fees, Municipal or

Council rates.

Net Return – this is the end result once you have accounted for all of the income and expenditure and it will show if you will have a cash surplus or deficit.

The more properties you calculate returns on, the better idea you will have of what is available in the market to suit your requirements. You’ll also protect yourself from any surprise costs. It’s wise to be conservative with your calculations and maybe add in a contingency amount.

Please remember, there may be more costs you need to factor into your calculations according to your situation.

Step 3 - Create your Criteria :

Before you go shopping for your investment property it’s important to know exactly what you’re looking for so that you buy a place that suits your requirements. The best way to do this is to create a list of certain criteria that a potential property must meet.

You may choose to be stringent on some of the criteria such as a set limit for the purchase price but then you may be a little more flexible on other criteria like accepting $10 less than the expected weekly rent.

So what would you include in your criteria? Here are a few suggestions:

Town population no lower than 10,000.

Expected rent at least 7% of the purchase price.

Brick house on land, no more than 10 years old.

Initial repairs to cost no more than $1,000.

Whatever criteria you choose is up to you but it gives you control over what you buy and will certainly decrease the time you spend looking for a property. From carrying out your research and working out the numbers you should find it easy to create your criteria. Now you can go and buy the property that’s right for you.

For the Next Step 4 - Property Insurance and Step 5 - Tracking your investment

To read the rest of the article and others more please visit:

http://propertyquestionsanswered.com/Property_Articles/5_steps_to_sucessful_property_investment.htm

Property Questions Answered is a Real Estate information website. Packed with full of resources and on going building of more resources to our browsers and surfers. http://propertyquestionsanswered.com provides resources on Buying a home, Selling a property, Renting a property, Letting a Property, Rent to own a property, etc., Property Questions Answered.com answers our browser's questions on how to sell a property quickly, how to rent out my home, how to rent a vacation home, how to buy a home, What is rent to own a home, and more and more of questions answered for you.