Is this the right time to buy a house, especially if you want to rent it? Is this the right way to make a good real estate investment? Where, when and why is it convenient to buy a house that we want to rent?
There are many readers who ask me this question, especially in light of the news concerning the post Covid-19 period. In today's guide, we will try to give us an answer, which may not be done in a couple of lines but which needs some reasoning. Well for all you soon to be home buyers I have this to say.
It might be the right time
If you have ended up on this page you are considering the opportunity to buy a property, whether it is an apartment in a condominium or other type of structure, to give it away for rent and try to obtain an income.
The good news is that the time is right, especially if you have some capital, no matter how small, to use at least as an advance for the purchase.
As we will see very soon, there have been some more unique than rare conditions that make the time particularly favorable to invest.
Why focus on income properties
The answer to today's question is, in general, affirmative. Yes, at this very moment it is worth investing in the property and it is worth buying to rent.
The market is experiencing three very particular conditions that make the purchase of a property and the consequent rental income very convenient:
• Prices are low: except for the big cities (and not even for all neighbourhoods), property prices have not yet recovered from the crisis and the housing bubble; the market is full of great bargains, no matter where you decide to buy;
• The economic crisis will increase the opportunities: from the Coronavirus onwards, the big question concerns the future. With an economic recession on the horizon, there will likely be more people who need to sell;
• Rents are on the rise: in every part of Italy, also given the fact that purchases have been at a standstill for a while, rental prices are on the rise. The annuities are particularly good and will continue to be so at least for the foreseeable future; nothing suggests that in the short- and medium-term people will stop living in rent, especially if an economic situation persists where few can buy;
• Interest rates are at an all-time low: on the issue of buying with a mortgage to rent, however, we will necessarily have to return later; the good investor, the one who really wants to earn, must do the math well because not all the rent will fit in our pockets: there is to talk about both taxes, and for those who buy with a mortgage, the interest, however low they are maybe.
How to monetize a real estate investment
You will also have to take into account the fact that in many areas of Italy the classic rent, the one through which we grant our property to a family, is only one of the possible options available to you who want to put your capital to good use.
Depending on whether they are university cities or tourist cities, or both cases (London, New York, Berlin, Rome, etc.) you can:
Rent to students
It can be a more problematic and more difficult way of renting to follow, but in many cities, it yields much more than traditional rent; renting by room, moreover, generates higher revenues, although you will also have to take into account the periods in which the rooms could remain empty; renting to students is all the more interesting when the property is close to the university facilities.
Rentals to tourists for short periods
AirBnb and all the services that imitate its functioning have opened very interesting doors for those who have a property in a tourist or business city; rents make it so much more, even if also in this case we must take into account the fact that we will not always be able to guarantee maximum occupancy.
Many are also thinking about buying a second home to be used for these projects, here is what I think about it:
Some useful advice to make a good deal for the purchase to be rented
There are some small tricks of those in the trade to choose a perfect property to be rented and generate an income. These tips, typically secret from those who have been operating on the market for a long time, you can apply them too without any kind of problem:
• The houses occupied by tenants cost less: the rental contract does not dissolve in the event of a sale and we will have a double advantage; lower price for the house and rent that will continue to arrive without us having to search for a tenant;
• If you want to work on it, choose a property to renovate: in case you have that spirit, you could buy a property in a less than perfect state, one of those to be restored, and then do the necessary work and present it on the market for a higher income;
• Where it is more important than how it is: better to take a non-beautiful property in an important area (center, university, other important areas for a group of people).
• With these tips you can begin to take your first steps in the sector, in order to identify the best house for our investment to rent through rent.
Study, study, study ...
As I explained to you in this article, it is not at all easy to have positive returns always and regardless but it is necessary to carefully study the context and the type of choices that are made.
Investing in real estate is a real business and, as such, requires time and planning that you may have to acquire in the field after tests, mistakes and successes.