(Starter) Guide for real estate investors
Aiming for a better return than on a savings account? Then investing in real estate is a reliable alternative. The return on investment translates into a monthly rental income on the one hand, and the property’s added value in the longer term on the other. Not only the demand for rental properties but also rental income is increasing. By indexing the leases, these closely follow inflation. When adequately maintained and cared for, a property’s value usually increases over time. Relatively low interest rates compared to inflation make it all even more attractive. An investment in real estate also offers great prospects for a balanced inheritance and retirement planning.
Discover our 5 insider tips to consider before you invest
1. Define your budget in advance and do not deviate from it
Make a very realistic estimate of your rental income so it ideally covers the repayment of your loan. Keep in mind that what you receive is a gross amount. You cannot avoid costs such as property tax, insurance, taxes, repairs, etc. The current low interest rates make it possible to invest in real estate even with a small budget. It is highly advisable to make an appointment with competent authorities, such as your bank, to discuss what your potential budget is.
2. Build up provisions in an emergency fund
As an investor, you might expect to avoid unforeseen and/or costly repairs, vacancy between tenants, non-payment of rent. Unfortunately, reality is often quite different. A forewarned and prepared investor is forearmed. If you have several properties, a separate account with such a fund is definetely no luxury.
3. Opt for the right type of real estate
Real estate offers a wide range of possibilities. You can invest in a house, flat, studio, garage boxs and much more. The challenge is to have a good feel of what the market wants and what type of real estate is in demand. Then take into account what type of real estate suits you, what the profile of your ideal tenant is and how much time you want to invest in follow-up. Once you have found a property, put yourself in the shoes of the potential tenant and look at it through his eyes.
4. Choose the best property
Now that you're looking through the eyes of your ideal tenant, start analysing the surroundings. Does the property have the necessary accessibility? Is the location suitable for the tenant's needs? A family has a different wish list than a single person looking for a first home. Also consider your own wishes: do you want a to renovate a property or rather choose a ready-to-use or even one? The overall condition of the building has a strong influence on the purchase and rental price. A new building always seems more expensive at first sight. Normally however, such a property will not need any renovation or major repairs for the first 10 years. The "look and feel" of a property also attracts a certain type of tenant. The quality of finishings inside and outside has a clear influence on the final rental price.
5. Don't forget to consider the time you will spend
We hope that our starter tips will guide you on your path to a first or new real estate investment. Our team is always available to answer all your questions at 078/48 47 00 or info@ap-p.be.
