Aside from relying on stocks or bonds to earn income, another point of entry for investors is the rental market with making a good investment in it a top priority. For first-timers, it may seem a bit daunting. But while real estate investments can be tricky to navigate, especially with options like a commercial type of property or a residential one, to more specific choices like a condo for sale in Tagaytay, it really shouldn’t scare anyone looking to generate income on the side as long as they have the basics down of rental real estate. To get started, here are a few things you’ll need to know about rental property investments.
What to Consider About Rental Properties
Before making a down payment on any property, you’ll need to first consider what type of property you’re looking for as it is going to dictate the purpose it’ll serve when being rented out to tenants. There are two types of properties to this, namely residential real estate and commercial real estate.
As the name suggests, residential real estate is a property rented out to those looking for a primary residence or a space to live in, either short-term or long-term. You’ll find potential tenants ranging from families to students to working young adults. Typically, residential properties have a lower purchase price making it easier to obtain residential mortgages from banks as they tend to be more accepting of clients with low credit scores as opposed to commercial loans. With proper management, mortgage payments don’t have to be too much of a pain in the neck to deal with. Currently, as more people are moving into cities in search of jobs, with others setting their sights on provinces in search of a reprieve, residential properties are high in demand making it easier to fill out a rental unit.
Meanwhile, businesses like retail investors, for example, are mainly the clients to look for when renting out commercial real estate with the property potentially housing a retail business, or even an office for a company. Unlike residential properties, commercial types pose a bit more complex due to the fact that commercial mortgages essentially have different requirements. Furthermore, property taxes vary depending on the location of your commercial property.
Assessing Your Rental Property
With the types of properties out of the way, it is time to take a closer look at your options. While some properties in your list may seem like an attractive choice, it’s good to remember one important factor when weighing down the pros and cons, namely: location. Essentially, a property’s location can be very telling of its property value and can single-handedly persuade potential tenants to immediately rent your unit as their living space, especially if it’s near commercial areas, or if in provinces, near tourist and vacation hotspots. Additionally, by having easy access to roads and public transportation, a higher monthly rent rate is more justified and is less likely to turn away potential tenants because of the property’s overall desirability.
Starting Your Journey With Real Estate Investing
Now that we’ve covered most of the initial points of decision-making in real estate investments, we’re one step away from being a real estate investor. Like any other investment, money is going to be the biggest driving force in all of this. The next step, therefore, is to search for a mortgage company that’ll lend you the money you need in order to make the purchase happen. Of course, the process isn’t just a simple availing of money, and voila, there you have it. In most cases, you and the company will negotiate the terms to make it feasible for everyone.
In terms of mortgage payment schemes, there are different types to be aware of with the most common type being a fixed-rate mortgage which has fixed interest rates for the whole duration of the loan, on the other hand, an adjustable-rate mortgage starts with an initial fixed rate that later on changes as the loan becomes older.
Aside from a mortgage, going for the down payment and dealing with interest rates is another option. However, the amount you need to pay upfront would be significantly higher. A larger down payment can help lower interest rates because it presents lower risks for the lender, while a smaller down payment would mean higher interest rates.
Other Considerations to Remember
Before an investment meets a sour situation, it is of course the responsibility of the investor to think of future problems and risks hence it is important to make sure that your documents relating to property ownership are legally valid with signatures from you, the buyer, and of course, the seller. Liens on a property are another thing to watch out for as they indicate that the owner still has debts to pay. Basically, properties with active liens cannot be sold.
Another important thing to take care of is to contact real estate investment trusts who will act as a safeguard for when something bad happens to your investment like coming across a lien that is discovered only when the transfer has been made.
And lastly, when it comes to moving onto the process of buying the actual property, make sure to have the property thoroughly inspected in case of potential issues.
Investing in a Condo
There are many rental properties in the real estate market to invest in with one of the choices being a condo. But is investing in a condo a good rental property to consider? The answer is yes! Rental income is a good source of passive income. As long as you know how to manage your investment property then you’ll most likely be seeing a steady monthly income just from the rental investment properties that you own. But, why condos instead of single-family homes for instance? For one, maintenance costs and monthly expenses are easier to manage. Keep in mind that with investing in a condo, you’ll only have to worry about the units you have invested in instead of the whole property.
With the rise of people seeking refuge away from the city, a condo for sale in Tagaytay is a worthy rental property to consider and can either function as a residential property or a vacation property. Currently, Pinevale, Crown Asia’s premium condo for sale in Tagaytay is open for preselling. It is an exquisite modern Danish-inspired smart condo that offers comfort in the midst of nature and has quick access to popular tourist locations such as the Tagaytay Picnic Grove. It is perfect for anyone looking for a quick getaway or a beautiful, serene home.
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