If you own a property, or you are considering it, finding out how you can make your financial investment work for you is of the utmost importance. After all, a property is likely one of the most expensive investments you will ever make.
There are a number of factors at play, depending on how much you bought the property for, the property’s overall resale value, whether you have a mortgage, and what purpose you have for owning the property in the first place.
Here’s how you can help make your property investment work for you:
Take out an additional loan without disrupting your mortgage
If you are looking to add value to your property by carrying out renovations or landscaping the garden, you will need to drum up a significant amount of spare cash. This may be problematic if you’ve already taken out a hefty mortgage for the property itself. Furthermore, you probably don’t want to change the rates or adjust the mortgage in any way to free up some extra capital because it would cause you a financial headache down the road.
This is important to consider because although you may think it straightforward to go to your existing mortgage broker and ask for an adjustment to your deal, the reality is quite different.
Of course, this issue is exacerbated when you are perceived to have bad credit. You may have the cash to take out an additional loan on top of your mortgage, but finding someone to lend you money when your credit is poor is incredibly difficult.
This does not mean it is impossible. In fact, there are certain companies that help you with secured loans bad credit, which can aid your property renovations without affecting your mortgage.
Remember to weigh up the financial benefits of the renovations (i.e., the increased property value) before taking out a loan. This will prevent you from overstretching yourself on hefty loans.
Consider renting out your property to tenants
Another approach to consider if you own a property is to let it out to tenants. Now, renting out your house is obviously not ideal if you bought the property to live in – especially if it is your family home – but if your requirements aren’t so clear cut, then making your house into a rental property could be worth considering.
This is because the tenants would provide you an additional income stream and make the money tied up in the property work harder for you. This is particularly useful if you are trying to pay off a mortgage.
However, this is not to say it is appropriate for everyone.
If you cannot afford to find alternative accommodation or uproot your family from your existing property, this strategy is not ideal.
Furthermore, becoming a landlord is hard work, and requires time, money, and patience to keep the property maintained and look after your tenants. This is why many landlords hire property managers to look after the day-to-day proceedings.
Have an exit strategy in mind before you buy
Lastly, always remember to have a clear exit strategy in mind if you want to invest in property.
You must be aware that a significant amount of money will be tied up in the house and is not easily retrieved. Property is an illiquid asset, and anyone who has attempted to sell their house during an economic downturn will tell you that it is not easy to get your money out once it has been put in.
Therefore, plan ahead to when you plan to sell to avoid running low on money and having to rush through a sale during an economic rough patch.