Are You A Responsible Investor?
Responsible property investment suggests that certain essential factors have been given due care and attention.
Firstly, a responsible property investor will ensure that they have the financial means to purchase an investment property and cover all associated costs.
Secondly, a responsible property investor should also consider the ongoing costs, including mortgage payments, maintenance, etc. of which a portion may have to be covered if rental income decreases.
A property investor can only be as successful as the information they have upon which to base their property investment decisions. Successful Investor Ltd. will always encourage property investors to invest within their financial means. Clear and precise breakdowns of purchase costs and realistic profit predictions are provided, to allow property investors to make their own informed investment decisions.
However, property investors often overlook other essential aspects which should be considered, particularly when purchasing "off plan" investment property.
For example, a property investor reserving an investment property off plan may pay the required cash deposit and sign legally binding contracts with the developer/seller. So far all costs, perhaps even including legal fees, are within the financial means of the property investor.
Depending on the investment opportunity in question, the bulk of the remaining deposit and purchase costs would still have to be paid before contract completion. Let's assume that a property investor has so far paid a 30% deposit. That leaves 70% of the purchase price outstanding. There may be indications at off plan stage of potential mortgage options available upon completion, but these options are open to variation and in 99% of cases not guaranteed. And what if a property investor were to underestimate the requirement of stage payments, due to be paid to the developer/seller at predetermined stages of the build process? It is plain to see how a property investor could not have sufficient funds to purchase certain investment property, especially if they were not correctly informed of all purchase costs from the outset.
So, how does a property investor ensure that they invest responsibly? It is essential that when purchasing investment property, or any type of property for that matter, that the property investor/buyer is aware of the total costs associated with that purchase and have a detailed financial breakdown based on realistic and researched figures. Any indications of rental income and capital growth should be based on the most relevant local comparable evidence. But remember, this is just an indication of potential profit, particularly when purchasing at off plan stage, so ensure that indicative figures are realistic and in no way exaggerated.
Giving due care and attention to these essential factors will ensure that property investors can make informed investment decisions, based on their individual requirements and investment budget.
Remember these key factors the next time you invest in property and ensure that you acquire a valuable asset, rather than a costly liability.