Investing in your family’s finances in the lucrative field of property doesn’t have to be complicated, in fact with a little preparation and care it can be a relatively easy experience. Something that most folks will be glad to know, as it can help ensure they have enough money for when their kids want to go to college, buy their first car, or get their first apartment. With that in mind, read on for some basics on where to put your money and what pitfalls to avoid, that doesn’t take a degree in finance to understand.
Property investment can be lucrative if you do it right.
Look at your end game
The first thing that you need to do when investing in property is to consider what you hope to achieve by this. For some folks it having a place that they can retire to that is mostly paid off. For others, it can be a way of saving a large lump sum for the future, as they buy a property with a mortgage and then rent it out to pay this off. While for others it’s all about a quick turnaround and making a decent profit in a shorter space of time. This is usually where people buy property cheap, renovate it and flip it. Accordingly, before you make any moves with your investment, you need to clearly define what want to achieve and ensure that your property investment plan is something that will get you there. Otherwise, it’s not a sound investment for your family’s finances.
Retirement is a time when you may want to enjoy your golden years, but that can be difficult on a tight budget. One way to obtain financial relief during retirement is to apply for a reverse mortgage. When you do so you will receive ongoing payments without having to pay back portions of the money monthly. However, the size and number of payments will be predetermined when you set up the loan. A reverse mortgage calculator can be used to make those estimations. A lender should approve you for such a loan if you are of retirement age, use the house as your main home, and can continue to pay the maintenance fees on the home, such as insurance. You can also take out a reverse loan on an apartment building in some cases, but only if you personally maintain residence in one of the units. Interest will accumulate on the loan as time passes, but until you move or pass away you can enjoy less financial pressure.
Review your financial capabilities
Investments are funny things, some folks say that those that invest for the future are prudent, while others think it is a foolhardy action akin to gambling away your family’s money. In fact, it is neither these things but something in the middle, because while it is prudent to plan for the future, investments are never sure things and can never be guaranteed.
Subsequently, it is vital that you look carefully at your family’s finances before you choose to put them into any investment including property. A good rule of thumb often used is never invest more than you can afford to lose. Unfortunately, a lot of folks forget this when it comes to Property because they think their money is safer in bricks and mortar. Yes, investing in property mean that you will still have a building that you can use, even if the market does suffer the worst and collapse. However that doesn’t mean it will be worth the amount that you have actually invested in it, so you can technically still lose money even in property investment.
Sell or lease
The next aspect of property investment that you need to get to grips with is whether you are buying to let, or buying to sell. While these may seem like similar things, in fact, they can include very different issues and pitfalls that any property investor needs to be aware of.
Buying a property for lease or to sell on are quite different things.
For example investing in buy to let properties may mean that you choose to purchase a residential home or apartment. However, it could mean that you prefer to place your money in commercial or industrial buildings, which are often more expensive but have a greater possibility of a higher return.
Buying a property to sell, is again quite different, as the condition of the building may not be as much of a priority. Instead, you may look at other factors such as location, and potential, and as long as you are prepared to invest some additional capital in renovating the place and getting it up to starch before you sell it an investment like this can still work well for you.
As you can see these two situations are quite different and need different resources to succeed. Therefore you will need to keep this in mind when choosing the right place to invest your family’s money.
Consider overseas property investment
Next, don’t be too alarmed if you find that many of the properties available in your area or country are out of your price range. This is because when priced out of the domestic market you can always consider oversea investment instead.
Now a lot of people can get nervous about investing in the overseas market because if something does go wrong, they are too far away to handle it personally. However, this isn’t really something that needs too much concern because it’s only really like investing in a house on the other side of the country, and if you have a good property management company dealing with it, it shouldn’t be too much of an issue anyway.
Next remember that overseas markets can be quite different from the ones at home, including the types of property available, the locations that are desirable, and how the purchase and lease processes actually work. In some countries, they have state-subsidized properties like these HDB BTO or Housing and development board’s buy to order properties in Singapore. Be careful of these as you may not be eligible to buy them when new. However you can buy these once they have been lived in, and a good job too as they can make a brilliant investment being a reasonable price and much in demand in that area.
Also remember that in some places in Europe such as France the property laws are different, meaning the emphasis is on you to prove there is anything wrong with the property rather than the other way around during the sale. This of course, if you don’t understand it can make the whole process very difficult and leave you open to losing money on your investment if anything does go wrong. Not something that you will want for your family’s nest egg I’m sure.
Get your tax sorted
Last of all, when considering investing in property for your family don’t forget that it will affect your tax return. Luckily, there are tax breaks available for property investments. Something that can make the entire process more achievable, so it’s worth looking into this before you buy and seeing what effect they could have. Just remember to fill in your return correctly and including your new investment, as you could be putting your family’s finances in jeopardy if not, and that is certainly not the end goal of your property investment exercise.