5 Things to Consider Before Buying Property | Property Guide by Violet Chak
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Owning property should be on everyone’s bucket list. Not only will owning property secure yourself and your family a forever home but it can create extra cash flow, offer you tax breaks and even protect you against inflation.
So you’ve decided that it’s time to buy your first property.
Violet Chak, a property investor and advisor has shared with us 3 things to consider before you make possibly the most important purchase of your life.
First, decide your investment goal.
Investing for your own stay or for earning extra cash flow by renting it out, will determine what kind of property you will buy. Properties for your own stay will be based on emotional deciding factors whereas buying for investment will be determined by analytical reasons to ensure a higher rental yield.
Secondly, check the developer’s track record.
Violet says the developer background is the second most important thing to consider when buying a property. Take a look at the developer’s background and past projects. Have they been successful and developed good quality properties?
Or have they had failed projects in the past and have a reputation of delivering projects very late? Do yourself a favour and look into this before purchasing to reduce any risk of poor investment.
Thirdly, location, location, location!
Depending on the type of property you are looking to buy, whether it is residential or commercial, you should consider the surrounding facilities in the area. Is it a tourist place? Do you need nearby schools for your children?
Think about the supply and demand of that area. If there is an oversupply of a type of property you would like to buy, Violet says you should reconsider your options because it may be difficult to cover your loan repayments. Look for high demand, low supply.
When investing in property, in terms of pricing first you should check your affordability and then look at the property’s potential of the price increasing in that area.
Last but not least, rental yield
Rental yield is the amount that you are likely to receive by renting out your property. It is calculated by taking the yearly rental income of a property and dividing it by the total amount that has been invested in that property.
Make sure that it can cover your loan!