Buying a home to live in has a different set of requirements and priorities to purchasing an investment property for rental income.
Often homebuyers new to property or real estate investing have their ‘own home’ goggles on when assessing rental properties for sale so they end up buying a home that’s not right for renters but right for them!
Buying for investment requires a property with more generic qualities, i.e. not specific to you. Targeting a demographic like students, working professionals or young families focuses your search on buying a property that’s attractive to the renter.
However if you’re wondering where shall I live and you’re buying a home for you; use the same criteria as investors use to filter your property search successfully i.e. Price and location.
Before commencing your property search you need to know what you can afford. With a price in mind you can exclude all properties that are not within your range.
Working out what you can afford will take some time. Do your research, but before you do too many online searches, seek advise from professionals like your financial advisor, accountant and later on maybe even your lawyer.
Financial knowledge is undervalued by many homebuyers who can fall into the trap of just trusting the information they find online. Skill up by reading books on property, mortgages, financial management, and ask questions in discussion forums like ours.
Once you’re fully up to speed with your finances, i.e. you’ve got your deposit and ideally a home loan pre-approval, then you can start your property search. Location is the next most important criteria.
For narrowing down your house hunt, make a list of your ‘must-haves’ and ‘nice-to-haves’ specific to your own personal lifestyle, for your home buying criteria. Of course if you’re buying for investment your list will be more generic and based on your target tenants and what they need in a location.
In your online search, hone in on your most desirable areas first but you may get a shock at what you can afford and realise you have to compromise. Do you need the bigger house or is being near the schools or place of work more important to you and your family?
Knowing there will be a trade off is good as it really refines your search and priorities – therefore don’t entirely discount surrounding areas as they may offer a better quality home as a trade off for being further away.
The homes in the up and coming areas can be a better buy if your desire is to get some capital gain in your property for sale later on.
If your purchase is for rental income, a smaller property in a better location may win over more tenants and have less vacancy.
So you need to know what you want and this in itself will take some time.
Remember to add to and use your list to filter every online search and also use it to assist in assessing homes at viewings.
There’s no quick fix to finding a new area to live or invest in when you’re buying a home. Preparation is key, and will prevent issues later on, for example you’ve borrowed too much, and the rent is not covering your outgoings and you’re forced to sell up.
Buying a property to rent out or live in is a serious business so treat it with respect and you’ll get exactly what you want from it.