If you are a homeowner and the thought of purchasing a second property to rent out to fund your retirement pot appeals to you, there are still some rules you should stick to that will ensure that you make a sound financial investment. Property will be the single most expensive purchase of your lifetime (unless you have a private jet knocking around) and you want to make sure that you have confidence in your financial decisions. Take a look at this guide to investing in a second property, boosting your income and securing a lucrative return on your investment in the long term.
Location Is Everything
If you are on the hunt for a second dwelling, it pays to stick to what you know. Purchase a property in an area local to you and that you know well. There is no point trying to grab a condo at a bargain price somewhere a few hundred miles away. As a landlord, it will be your responsibility to maintain the property and be on hand should a tenant require an appliance fixing or a water leak halting.
If you have lived in your vicinity for a few years, you will know of the up and coming areas and places where young professionals reside. A young working couple would make the ideal pair of tenants for a small second property. Use the list provided on moneycrashers.com as a guide when vetting potential tenants. Start small and keep your property investment manageable. You don’t want your emerging property empire to encroach upon your current quality of life.
Sort Out Your Finances
If you have been plodding along quite nicely and feel like your finances are in top shape, it still pays to assess them before applying for a property investor loan. The fact that you were two days late paying your credit card bill two years ago will still show up on your credit rating and could prevent an institution from lending to you. Consider looking at employing the services of one of the many credit repair companies listed on credit repair.company to try and remove this annoying blot from your credit history. With a positive credit score, you will be able to have your pick of mortgages and achieve the best deal.
Think Long Term
If this is an investment for your retirement, you need to consider this as a business dealing. Don’t enter a property when on your house search and not end up purchasing it simply because you didn’t like the Artex texturing on the ceiling. Your potential tenants won’t care and will pay their rent regularly each month whether there’s a textured ceiling in the living room or not.
As a long term investment, you will need to ensure that the property remains in a sound condition and in good decorative order. In between tenants, it pays to keep on top of niggling maintenance issues. Give the rooms a coat of paint, change the bulbs that aren’t working and pull the weeds out of the garden.
Renting out a second property can be daunting, however, if you follow this advice, you have every chance of securing that all important nest egg for your retirement.