There are a lot of mixed feelings involved in buying real estate: confusion, excitement, intimidation and a sense of achievement. These are some of the emotions you might encounter when you sign a contract on your first property.
As a beginner property buyer or investor, the best kind of property investment to make is turnkey property. This is because there’s lesser work involved and there’s less likelihood of things going wrong. But whatever type of property you are buying there’s still a bit of preparation involved.
The turn key property investment process is less rigorous and can be summarized in three phases:
Phase 1: Preparation
There are several factors contained in the preparation process:
The first thing you need to determine is how much you want to spend on your first house. Your budget should include not only the cost of buying the property but also other associated monthly costs. Remember, the rentals should cover your turn key property investment over time.
Make sure the rental income you get will cover all the monthly costs including mortgage payments and leave you with some residual income.
- Loan process
If you have a bad repayment record for your current loans, this will affect your ability to access favorable interest rates on your property mortgage.
Before applying for a mortgage, take some time to repair your record by repaying your existing loans. Though this will prolong your preparation phase, it will improve your likelihood of getting a loan.
The most critical part of property buying is research. Only by researching will you find:
- The best loan options available. Some loans for instance, do not require any down payment
- Companies that deal in turn key property investment
- The best priced property
- How to deal with property taxation
Phase 2: Hunting
The second phase of the process involves house hunting.
- Get In Touch With A Turnkey Company
With normal type of real estate investing, you would have to hunt for a real estate agent. Most turnkey companies usually have agents in-house who can show you houses you’d be interested in.
- Identify Your Property
You will need to set some time to go property-viewing. Keep an open mind and buy property based on what is ‘hot’ that tenants prefer as opposed to what you like. Identifying the right turn key property investment opportunity is the best step forward.
- The Offer
If you see the ‘perfect’ property, make your offer. You will probably have to go through a back and forth counter offer process; but with some negotiation, the final price should be within your budget.
Avoid going over-budget as this will only strain your finances.
Phase 3: Post-purchase phase
Several things happen after the property seller has accepted your offer:
- Home Appraisal
Your bank will need an appraisal in order to approve your mortgage. An appraised value that is higher than your offer gives you equity on your property. If the appraisal is lower than the offer you made, you can withdraw the offer or renegotiate for a lower purchase price.
- Closing The Deal
Only sign documents once you are comfortable with your purchase. Your budget should include a fee for a lawyer. At the end of signing the contracts, you will officially be a new property owner.
Though buying a turnkey property is a lot easier than buying other real estate, it pays to stay involved and pay attention to what you are spending on. Follow the above simple guide and you will be more accountable about your turn key property investment spending.