How to invest money in a house is another safe way you should try aside from investing in gold. Home investment is a way to have passive income because a house is a real and visible asset. Land and property prices tend to be stable or even continue to rise, so here are some tips for you.
Simple Tips on How to Invest Money in A House
- Determine Investment Goals
Before jumping into the world of home investment, don’t forget to first determine what your investment goals are. Some people buy houses to rent so that you will get passive income per month from the tenant. Some others buy to resell when prices go up, or can also be occupied by themselves as an investment.
- Calculate Financial Capability
There are many types of investments but if you are interested in investing in a house, consider your financial capabilities. Calculate your financial capabilities first so that you’re not overwhelmed when you have to buy a house and renovate it. Also, calculate carefully including whether your capital is sufficient for the down payment on the house purchase.
Buying a house usually requires a down payment or you can also buy it with an installment payment system. Also remember that there are other costs such as taxes and notaries, plus home maintenance costs. It’s considered as the safest when house installments should be less than 30% or 40% of your total monthly income.
- Choose Several Houses with Strategic Locations
How to put money down on a house must be done correctly so that you can avoid losses and risks. Investing in this kind of field should start by choosing houses that are strategically located, like areas with growth potential. Usually houses with strategic locations are more valuable and will be easier to increase in the future.
- Compare Houses Prices
After getting several references for houses with strategic locations, then compare prices between one location with another. You need to know the details of each house price, including the house price trend and rental potential. Also consider whether the area is attractive enough for prospective tenants or home buyers to see the potential for purchase.
- Consider Rental Properties
Rental properties are just as safe because you just buy a house and then rent it to someone else. After being rented, the tenant will pay regular rent every month which becomes your income. If house flipping tends to be short-term, then rental properties are a long-term way to get passive income.
Real estate investing for beginners can be started from this method, because many people need a place to live. So renting a house will be easier because the opportunities are great and are inflation-resistant. The value of the house itself will also continue to increase, besides that you can manage it remotely.
- Consider House Flipping
For beginners, buying a cheap house which is then renovated and then sold at a high price is easy. This can be done in a short time or even just a few months and you can make a profit. This is different from buying a house to rent it out to someone else in the long term.
If it sells quickly, your capital will return faster and you will definitely make a profit immediately. For those of you who are creative and like to design and makeover houses, this is very fun to do. But the risks are the property market goes down, the house doesn’t sell well, or the renovation costs are soaring.
- Pay Attention to the Condition of the House and Its Legality
How to invest money in a house for beginners should be started with a good condition of the house. You should know the condition of the house before renting or reselling it, especially if you buy a used house. At least before renovating, you know very well that the building structure and other important factors are still good.
If the condition is still good, only minor renovations are needed so you don’t have to spend too much money. Also, make sure that the legality of the house is clear by avoiding a house that is still in dispute. The help of an official notary or PPAT is needed to help you take care of the building’s legality.
How to invest money in a house is quite easy and safe compared to stock investment. Although this kind of investment still has risks, at least it’s very small. Investing in a house is a form of diversification to reduce the risk of other investments that are more volatile.
