Are you thinking about investing in a new property? This can be a strong investment choice and is arguably one of the most secure ways to use money that you might have built up over the years. However, it is important that you are aware of the potential issues with this plan.
Problems You Can’t Afford To Repair
First, it’s important that you make sure that you are getting a survey on any property that you are thinking about investing in. This is important regardless of whether you are buying a new home or one that has been standing for several years. Older homes present more of a risk here but new homes can be poorly built which can bring other issues that you’ll need to handle head-on.
It can be tempting to avoid the cost of a home survey, but this is always going to be a mistake and lead to further trouble down the road. You could even find that there are issues in the home that mean it is unsafe for you or anyone else to live in. If you get a survey, then you can speak to the owner directly. You could even demand that they fix the issues before you move forward with the sale. Depending on the costs, many homeowners will agree to conditions like this. Particularly, if they are hoping for a fast sale and there’s a lot of people that do want to shift their home on the market as quickly as possible.
A Mortgage Shortfall
Another problem that you need to watch out for is a mortgage shortfall. When you buy a home, you do need to think about whether it’s the right time. It’s important to realize that the housing market goes through periodic ups and downs. As such, you need to ensure that you don’t end up in a situation where you are buying a home at the highest price. If you do this, then when it’s time to sell, you could struggle to make back the money that you have put into the mortgage. Essentially, you could end up with a loss and that’s something that you definitely need to avoid.
To avoid a loss, there are a few steps that you can take, both before and after the initial purchase. For instance, you might want to think about researching the market more carefully. You could have your eye on a particular home. If that’s the case, then it’s always going to make sense to explore this home and its history. Look at whether the price has risen recently. If that’s the case, it may fall again before too long.
A Sale Falling Through
This issue is difficult to prevent but it can still spell trouble for you. As such, it’s best to be aware of some of the steps that you can potentially take to avoid it.
There are numerous reasons why a sale might fall through. For instance, it’s possible that you could be gazumped. This is where another buyer comes in with a higher officer and snatches the property from you. While it’s difficult to avoid this danger, it’s not impossible. To do this, you should think about asking the seller to remove the property from the market once your offer has been accepted. If you do this, it’s difficult for a buyer to swoop in with a new offer.
You also need to think about the situation of the seller. Don’t forget, a seller will often be focused on the purchase of their new property. If this falls through, then they can be reluctant to go forward with the sale, thus creating a ripple effect. Ask them about their next step once they have sold and proceed with caution if the sale is contingent on the successful purchase of a specific home.
The Cost Ballooning
You do need to make sure that you keep the costs of your property sale under a tight level of control. It’s important that you don’t start your home purchase with a considerable level of debt. This can make paying off your mortgage considerably more difficult and we’re going to discuss that more a little further down. To avoid this, you need to ensure that you are aware of the different costs that come with buying a property. This goes beyond the initial purchase or even the deposit. For instance, you will need to pay for legal support as well as a moving team.
There are always ways to reduce the costs here. For instance, you might want to think about hiring most of the moving. If you do this, then you’ll be able to save a fortune on labor. However, this will require you to hire a van. It’s also important that you can lift your items safely which means investing in the right equipment.
You must make sure that you are working out a budget that you can follow before you proceed with the move. Get a grip on all the costs and consider any time that you are going to need to take off work as well.
Repayments You Can’t Afford
Finally, you need to make sure that you are thinking about the repayments that you’ll need to make on the property. If these aren’t affordable, you’ll be forced to sell the home, even if that does mean that you face a loss. To avoid this, you need to ensure that you are saving the biggest deposit possible. You also need to shop around for the right mortgage option. There are various choices available such as an HDB loan. By completing the right level of research, you can guarantee that the risk doesn’t cripple you financially. It’s also worth speaking to a broker. They’ll be able to help you find the best deals, some of which won’t be advertised publicly.
We hope this helps you understand some of the problems that you can run into when investing in property and the potential solutions that you might need. By taking the right steps, you can ensure that this investment doesn’t land you in financial difficulty.