Are you thinking of investing in real estate for the first time? Investing in rental real estate can generate income in the long-run while also jumpstarting or broadening your investment portfolio. Real estate is an excellent asset to invest in for the first time because homing is a necessity that people will always count on. The market steadily expands year after year as new property development projects and refurbishments populate the land. With that said, making an investment and becoming a landlord is a serious commitment that requires a lot of research.
Are you ready to be a landlord?
The act of property investing entails various levels of commitment in terms of financial, time, and effort. There are different investment opportunities for each level of commitment and what you may be ready for at the moment. Some examples are:
Invest in a property you already own
Investing in real estate doesn’t always mean making a new property purchase. If you already own a property, you may be in a position to rent it (or rooms of it) out for short or long-term rent. Alternatively, you can take the route of investing in fixing up your property so you can sell it for an increased value.
Buy a new rental property
Another popular route is buying a piece of property to rent it out. This option allows you to use the rent income to pay off the place’s mortgage. Whether you decide to invest in a newly-built or older property depends on whether you are willing to invest in renovations and what scale of investment you are ready to bet on.
The beauty of subsidising a property is that you can decide to use the property for your own needs on your own accord, without paying any rent.
Finding a good property
The most integral step of investing in real estate is finding a promising property. This part is where Estate Searcher comes in handy; our platform is a hub for real estate listings across Cyprus from individuals and agencies.
While searching for properties, we recommend taking the following factors into account:
Location
Cyprus is a popular destination for real estate investment as the beautiful homes in the warm weather and relaxing environment are sought after by tourists and locals alike. Using the customisable search bar, you can browse thousands of Cyprus properties by location on Estate Searcher.
What do tenants want
If you’re planning on renting out the property, you must consider what people want and need in the current real estate market. You can make better-informed decisions by keeping up to date on real estate and financial happenings such as trends and news.
Market value
How much is this property worth in the real estate market? If you’re planning on selling or renting out the property, it’s essential to note your competitors’ pricing rates and how they will change with inflation rates.
Maintenance costs
You must include general wear and tear costs in your investment budget and consider insurance costs (in the case of more significant instances of destruction). A general rule of thumb is to save another 1% of a property’s value for maintenance purposes per year. For rental properties, it’s recommended to set aside half of your monthly rental income for maintenance, taxes, insurance etc.
Getting a mortgage for rental property
In Cyprus, you can enquire into housing loans based on each bank’s packages.
The many bank programs require various percentages of down payment and interest rate. You can calculate an estimation of your mortgage rate through many of the banks’ websites before enquiring directly; Bank of Cyprus, Eurobank, Alpha Bank, Hellenic Bank.
Read more on each banks’ housing loan policies here.
Rewards and risks of being a landlord
Investing in rental real estate has the perks of extra financial income. However, you want to consider the bigger picture before committing your time and money.
Rewards:
- Rental income
- Permanent ownership
- Freedom to renovate as you wish
- Stable and tangible investment
- Ability to use the property for yourself or family members if you desire
Risks:
- You may run into unreliable tenants
- Maintenance fees
- Hard to sell real estate if needed
- If you don’t find tenants, you won’t receive any rental income but will still have to pay general expenses
Familiarise yourself with landlord-rental laws
Before becoming a landlord, you want to familiarise yourself with the local rental laws to prepare yourself for potential tenant situations (e.g. eviction laws, rent increase laws). Read more on rental laws here.
Acquire an adequate maintenance team
When going into the property business, you will gain the duties of maintenance and managing tenants. We recommend hiring and having a good working relationship with a handyman, a property manager/real estate agent, a contractor, and a cleaner, so you’re ready for everything.
Thanks for your advice about how you must take into account what people want and need in the present real estate market if you intend to rent out the house. I’m helping my friend look for a real estate buyer consultants since she’s looking into few town house properties to invest on. I love her strategy in investment so I’m watching and researching to learn more about it.