Whether it is your first time or already experienced in this field, you must strategize before investing in a property. Real estate investment is a lucrative job, but it also requires a prolific amount of time and financial commitment. Hence, you must acquaint yourself with steps on maximizing investment property returns before proceeding with the buying or selling process.
Focus On the Best-Selling Property Types
One of the most crucial steps in real estate investment is choosing the type of property to purchase. You have to consider plenty of demographic factors if you wish to receive a high return on investment. Condominium units, apartments, and single-family homes are kings of the market in the Philippines. Investing in such properties can better ensure that you would get your money back in the long run.
Townhomes are also becoming a good investment in the Philippines. According to Trans-Phil Land Corporation, the number of Filipinos supporting townhouse investment is continually growing. About 80 percent of them are between 35 and 45 years old.
High marketability is an essential characteristic that you should always look after to sell your real estate unit. Some properties already have high marketability even in the pre-renovation period. It truly depends on the location, type of estate, and more. Nonetheless, there are still ways to improve the marketability of your property even if it is not what prospective buyers initially want.
Do Not Take Photos of the Property by Yourself
As the old saying goes, “first impressions last”. The secret to selling your investment property is adjusting. You must provide your prospective buyers with the home that they would want to stay in. Although the market price contributes to their decision-making, if you can show them an amazing home, they would rather spend extra thousands.
It is precisely the reason why taking good property photos is essential. Your goal is to make the property of central interest to your buyers, and not just the price. While you can do the photography yourself, it is highly recommended that you leave it at the hands of professionals. They are more adept when it comes to making digital photos of your property more appealing.
You can indeed save money if you make it a DIY project. However, it does not guarantee an increase in the marketability of your investment property. If you lose the interest of your potential clients way before they step into the house, it may hurt your finances. You can find a lot of good photographers here in the Philippines. Some even specialize in shooting photos and videos for real estate purposes.
Get the Right Insurance Policy
Investing in real estate properties comes with high risks. Fortunately, the ideal insurance policy can protect you from different financial threats in the industry. Just make sure that you have the right one because overpaying for insurance can also hurt your margins. One of the perks of having proper insurance is a higher return on investment. Needless to say, insurance can also serve as a sort of contingency plan should something threaten your investment.
A good case in point is property damage. If you have insurance, the company would cover the full or partial expenses, depending on the case. It can save you thousands of pesos, so make sure to take care of it beforehand. The Philippines has a wide selection of insurance policies. Hence, you have to be smart in choosing what to get for your investment property.
Shopping for quotes is one of the keys to finding the right insurance policy. You must not stop at the first salesperson you speak with, no matter how persuading they may be. Get quotes from a few agents, so you can make comparisons. Consider local insurance offices in the Philippines since they often provide better services.
Refinance Your Mortgage (If Necessary)
Evaluate the mortgage rate or the housing loan that you are currently paying on your property. You should also compare it with today’s rates in the Philippines since many financial institutions offer these kinds of assistance. If your current mortgage can still be reduced by at least half a percent, you should consider refinancing it. The process can be tedious, but it can save you a lot of money in the long run.
You can have an opportunity to pull some cash for other investments if you decide to refinance your mortgage. Many seasoned investors support refinancing to secure additional properties. You can follow this strategy as well, but make sure not to overdo this leverage. It can be quite useful, but it can also threaten your finances if not used responsibly.
Perform Preventive Maintenance
If you think you do not have what it takes to perform preventive maintenance, you should not make a property investment. Ignoring this aspect would only later translate to a financial disaster. Maintaining an investment property is not an easy task, more so if you work a day job. When you fail to carry out preventive maintenance of your unit, it can cost you a lot more in the long run. Major systems and some appliances break more frequently if not taken care of.
Doing repairs is your responsibility as the property owner. However, pursuing actions that would prevent any issues is better than constantly repairing. If you tolerate the lack of maintenance, you would most likely lose more money over time. Most property features are bound to deteriorate, so make sure to take the necessary actions before they become obsolete.
Establish More Revenue Channels
Your properties should not be your only source of income if you want to maximize your investment. Adding extra revenue channels can help you achieve steady financial growth. You can operate a business alongside your investment property. A good case in point is a laundry service to your tenants. It can boost the amount of money that you get from your properties.
You can be as creative as you want when it comes to establishing multiple streams of income. Make sure to evaluate what types of tenants you currently have to provide a service that can better cater to their needs. For example, they are primarily students or office workers. A printing service within the property can be profitable. Moreover, the capital for it is not too large, so you can easily adjust your overall expenses.
Increase Your Property’s Value
Another obvious step that you should take to get bigger returns on your investment is increasing the value of your property. There are so many ways on how you can do it. You may do some painting to make your home look more fresh and desirable. Pursuing low-maintenance landscaping is also advisable since it can increase your property’s marketability. If your budget allows, you can also incorporate smart technologies.
The higher the property value, the higher the expected return on investment. While this may require a longer commitment, it can certainly be financially rewarding in the long run. Just make sure to remodel only those areas of your property that need improvement. Some features can be maintained as long as they are in excellent condition.
Reasonably Price Your Rent
Investment property owners in the Philippines have the legal rights to increase weekly rent based on factors like inflation. However, you should still keep your pricing in check. While it is good to receive extra thousands in your rental properties, pricing it way too much can backfire. When your rental prices become unacceptable, you may lose good tenants, which can later threaten your financial stability.
Pricing reasonably does not mean you should make rent below the market rate. Of course, that would be unfair on your end. What we are trying to say is that you should not overdo the price increase.
Maximizing the return on your real estate investment is not easy. Not everything would be handed to you. If you want to have a higher income from your investment properties, you have to be resourceful in doing business. Sitting around and waiting for another paycheck would not help you move forward.
Any experienced investor knows that real estate investment takes a deeper commitment than just securing the property. Prepare yourself to carry out or perform preventive maintenance, do repairs, adjust rental prices, and more. Only then you would be able to receive that big paycheck.