Could Investing in Property Be Right For You?

In some ways the very opposite of an online mompreneur friendly ‘side hustle’ would be to invest in bricks and mortar, however, when you compare the two methods of making an income there are some huge similarities – mostly linked to the aspect of building an asset, such as a blog and then leveraging this asset to create passive income (i.e. by hosting sponsored posts), or in the case of property, generating monthly income by renting the property out.

 

A challenge a lot of mompreneurs have is that they are putting many eggs into one basket rather than diversifying their income generating strategy to find a balance between the online and physical world.

 

It’s wise, as an online mompreneur, to consider diversifying your income generating strategy to incorporate a more stable and traditional asset such as investing in property – to give you the financial security you desire; as online revenue can be a little less secure, in that, all it takes is one major security breach, some bad publicity, or even a significant outage to put you in choppy waters.  Therefore, with all the money you’ll soon be making from your online venture it might be worth considering a more ‘old school’ way to create assets.

 

The property purchasing process can seem overwhelming as a first time investor but the process is relatively simple and there are plenty of online tools to help you.  The professional fees that are paid out whilst purchasing a property are the aspect that can be the most off-putting; but this feeling eases when you start viewing them as a tax deductible business expense.

 

This article offers some general inspiration for people dipping their toe into the idea of buying an investment property.  It’ll help you think about where to find a property, what type of property to invest in, and who to rent to.

 

 

WHERE TO BUY

Many amateur property investors choose to head to an auction, thinking this will be the best place to grab a deal, and to an extent they are right – however, there’s often a reason why the property is being sold at auction rather than by a realtor.  If it’s as simple as a financial issue where the bank has foreclosed on the house and their corporate policy is to always sell at auction – that’s fine – but think of buying a car at an auction, often times, sellers will put their car through auction knowing it has some hidden faults or damage that you might not spot on a quick once over in the auction room.

 

A better option, particularly if you are a newbie is to find sellers directly and negotiate with them direct.  They can sometimes be a bit trickier to find than going to an estate agent that will offer a brochure, set up appointments, and so on – but in this internet age, it’s very possible to find people willing to sell their homes direct.

 

WHAT TO BUY

If you’re looking at buying a property for investment purposes, there are two main options.  The first is to find a rundown property that you subsequently renovate and flip; this way, you can make anywhere between $5k and $50k within a matter of months… it’s a very popular option for people with experience in building, plumbing, electrics, and decorating; and some of the wealthiest people in your circle of friends might be tradesmen due to the huge demand for these skills.  Indeed, often traders that renovate properties earn way more than learned white collar workers, due to their ability to flip properties in this way.

 

Along with buying a property, something to consider is your exit strategy in terms of selling your property; as many times you’ll be stung by several taxes that severely cut into your profit, which is why looking into 1031 exchange property might be a good idea if you’re serious about moving forward as a property investor.

 

 

WHO TO RENT TO

There are two core markets; students and professionals.

 

The great thing about students is that often their parents will act as a guarantor in terms of the contracted rent and any damage that might occur during their tenure.  Even more beneficial is that, a lot of times with student properties, the student will pay the rent up front for the whole year, or at least a semester (around three months) which is good news from a cash-flow perspective.

 

The pros of professionals is that they are the most likely group of people to keep the house tidy, conform to the rules, and pay their rent on time – however, there are plenty of professional people that lose their job and end up falling behind with rent, and actually, a large proportion of eviction action is pursued in court against ‘professional’ tenants.  

 

Moreover, professional people are more likely to leverage the leniency of the law when they do just a little bit of research to find out how much tenancy law is written in the favour of the tenant rather than the landlord.  Professional tenants are great, when they are great, but contrary to popular opinion, they might be a riskier group to rent to than students.

 

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