Investment properties: Deals & Frequently Asked Questions explained

Investing in investment properties can diversify your investment portfolio.

Below, different types of investment properties for sale are considered from various angles such as the type of rental property, the location, the type of buy-to-let property and the purpose.

In addition, several frequently asked questions about investment properties are addressed, such as:

• Where to buy an investment property for rent?
• What features does a good investment property have?
• What is an investment property exactly?
• What does an investment property cost?

We start with an overview of investment properties for sale, listed according to the type of rental guarantee for investors.

Investment properties on offer

See below various investment properties for sale in different property markets and countries.

Search by different filters such as type of rental guarantee, location, type of buy-to-let property and purpose.

These investment properties are interesting to earn a passive income with.

In concrete terms, you can earn a nice return on your invested capital through the rental income and/or through the subsequent sale of the property with added value.

Discover below the fascinating world of investment properties and start earning solid returns.

Investment properties for sale with rental guarantee

Investing in rental property means that there are also risks involved in terms of rental income and returns.

If there is sub-optimal occupancy and therefore vacancy, or if there are defaults in payment, your annual return will be severely reduced.

This risk in terms of return on rental income is therefore fully or partially covered by construction promoters.

Specifically, there are investment properties for sale with bronze, silver and golden rental guarantees.

Investment properties for sale with BRONZE rental guarantee

Room rental properties for sale with SILVER rental guarantee

Rented investment properties for sale with GOLDEN rental guarantee

Where to buy investment properties?

What is the best way to determine whether a particular area is desirable for investment property?

Before you buy a buy-to-let property in an area you are not so familiar with, you should evaluate the attractiveness of the property objectively.

Owning a buy-to-let property for rent makes no sense if there are no/insufficient people who want to rent it.

The best information almost always comes from someone with in-depth knowledge of the area (such as a notary, estate agent or property manager).

But don't underestimate the power of the Internet today!

For example, the Internet can help you determine walking distance scores, the quality of local education and crime statistics.

The Internet can also be particularly useful for verifying and checking information you obtain from property promoters and agents themselves.

Quality of local education

Suppose you are told by a certain property developer that the local schools are of absolute excellence. Then you can easily check it on the internet via a search engine such as Google.

Do you find online a totally different picture of the quality of local education? Then you should be on your guard.

You would rather not buy an investment property in an area with poor quality schools.

The poorer the quality of the schools in the vicinity of a buy-to-let property, the less likely it is that this investment property will increase in value significantly in the long term.

In any case, do not trust any representative's word and do your own research on the quality of the schools in your neighbourhood.

Thanks to the Internet, you are able to quickly find the right information to check if the information you received is correct.

In other words, the Internet can help you get a good idea of the quality and level of local educational institutions.

Information you find online should of course always be approached critically and objectively.

Such information can in any case be very useful when you want to find out whether the developer or agent in question is providing correct information...

Walking distance score

Tenants' demand for studios, flats and houses in large cities or urban areas is largely determined by their walking distance score.

The concept of walking distance is gaining popularity as quite a few people are exchanging suburban areas for smaller, more modest housing units in or closer to city centres.

The more people want to live close to local businesses, restaurants, friends and their work, the smaller the need for a car in the city centre becomes.

It is often difficult to find a parking space in the city or in urban areas anyway.

On top of this, there are increasingly stringent emission standards and the associated risk of capital destruction.

Cars that no longer meet emission standards are impossible to get rid of.

Consequently, residential areas in or close to the city centre are increasingly analysed on the basis of the modern needs of the local residents.

Bus routes, metro lines, cycle paths, walking routes and public transport such as tram lines are all becoming more important as more people move into smaller homes in the city centre.

Potential tenants thus evaluate how friendly and convenient a certain neighbourhood is for people without a personal vehicle at their disposal.

A potential tenant of a property in or near the city centre will therefore always consider whether the area is suitable for walking, cycling and commuting.

Are you comparing investment properties in a large city or a densely populated area?

Then you would do well to use the Internet to determine how interesting the neighbourhoods in question are for people without cars.

In other words, put yourself in the shoes of a tenant.

Crime statistics

Crime and successful investing do not go well together. Several start-up property investors have already experienced this harsh reality first-hand.

High crime rate in a certain neighbourhood leads to many problems in terms of real estate investment.

For example, crime often goes hand in hand with alcoholism and/or drug use.

And when drugs are involved, car thefts, domestic violence, house burglaries and vandalism are never far away.

Such things are not desirable for owners of investment property.

For example, the probability of non-payment is much higher in such a neighbourhood.

There is an increased chance that your tenant(s) will not pay on time for a variety of reasons (such as lack of liquidity or incarceration).

And even if your tenants in such a neighbourhood are honest and hard-working, the chances are much higher that they will be sucked into a negative spiral.

Apart from the problems you may experience as a landlord, you should also be aware that property in such a neighbourhood is quite illiquid.

After all, the pool of interested buyers is usually small in such neighbourhoods if you ever decide to sell your property.

So before investing in a particular neighbourhood, it is a matter of analysing the crime figures.

Not every crime is the same

Make a distinction here between "trivialities" such as calls for noise pollution (from music systems or pets such as dogs) on the one hand and really serious crimes on the other.

The latter category includes real criminal acts such as robberies, burglaries with violence, thefts, arson, possession of weapons, shooting, and so on.

In other words, it is important to get a feel for the nature of crime in a particular neighbourhood. Statistics can easily be misinterpreted.

Try to talk to the neighbourhood policeman or someone from the local police department to find out what is going on at the source.

Also use the Internet to find out what has happened in the past in a specific neighbourhood.

Technology as a tool

For a long time, investing in real estate outside one's own country was difficult to master.

The reason is obvious: If you bought a house in an unknown place abroad a few decades ago, you often did not know what you were getting yourself into.

But times have changed, largely due to technological evolution and developments.

Information technology has now improved to such an extent that you can be very well informed with the help of the Internet.

This means that with the right preparation and due diligence, you can avoid many surprises and pitfalls.

Dozens of high-quality websites (from companies, authorities and private individuals) provide interesting information.

Such websites can help you get the information you need to make an objective judgement about a particular neighbourhood.

You can also use Internet technology to:

• View public transport shuttle times,
• Evaluate the supply of schools and training, and
• Investigate the proximity of facilities such as health care facilities, supermarkets, shops and banks.

Do you want to invest defensively in rental property? Then you should take enough time to analyse a potential neighbourhood before actually investing there.

What are the best places to buy investment properties?

How can you determine the best places to buy investment properties?

If you are wondering where to buy property for rent, you should keep a few things in mind.

Thus, you need to understand that the most suitable property market for your neighbour or colleague is not necessarily the best property market for you.

Where you ultimately invest in real estate should depend largely on your personal investment goals and investment horizon.

The best places to invest in residential property for rent have three common characteristics:

1. Affordability
2. Population growth
3. Economic growth (with increasing number of jobs)

Do you identify a specific property market that is blessed with these three factors?

Then you will most likely find good investment opportunities for both a monthly positive cash flow and an attractive increase in value in the medium to long term.

There are various cities and regions around the world where this mix of factors is present.

In other words, they are places where you can buy high-cash-flow buy-to-let properties while prices are still relatively low compared to (overvalued) premium hotspots.

What is a good investment property?

Are you looking for a suitable and stable investment property?

To diversify your investment portfolio, create a stable monthly income stream and build more long-term wealth?

Please note that this takes time and patience. In other words, it is impossible to get rich quick with decent investment properties.

Finding a good and sound investment property is a complicated matter.

The reason for this is that you have to take into account a number of risks that can wipe out some or all of your returns.

And with a wide range of investment properties for sale internationally, it can be difficult for many private investors to decide which buy-to-let property is best to buy now.

If you understand what distinguishes a good investment property from less interesting options, you will be able to find a profitable rental investment instead of pouring your money into a bottomless pit.

So how can you know if an investment property is a good investment or not?

Find out below by looking at some of the characteristics and qualities of a good investment property.

Single-family houses as an investment type

Real estate investors can earn rental income from different types of properties.

For example, you can choose to buy a single-family house, an apartment building, a multi-family house such as a duplex or triplex or commercial property.

But what is the best type of investment property to invest in?

Although it is possible to buy and rent any type of property with financial success, classic single-family houses are usually the best investment option for (first-time) property investors.

These types of housing units are usually more affordable and easier to finance and maintain.

They also increase in value faster and you only have one tenant, which is less stressful for you as a landlord.

Moreover, single-family houses tend to attract tenants who rent for longer periods and they are easier to sell (and therefore more liquid) than multi-family houses.

Positive cash flow

The way to make money with a rental property is through rental income.

The monthly cash flow of an investment property is the difference between the monthly rental income and the monthly expenses.

Interesting investment properties are those for which this calculation yields a positive amount.

So ideally, an investment property will generate a positive cash flow every month. This means that the rental property brings money into your wallet every month.

A positive monthly cash flow allows you to put money aside for urgent expenses.

It is also the ideal situation to build up additional equity and, at a later stage, to further grow your property portfolio.

In other words, the more positive cash flow a revenue property generates, the better.

Professional property management options

Sound hands-on property management plays a crucial role in the success of a real estate investment.

However, it is not always possible to manage and rent out the property yourself.

This is the case, for example, if the property is foreign.

Unless you have the time, energy and will to manage and monitor your rental property yourself, you will definitely want to hire a professional manager.

The availability of property management companies is a crucial part of finding a good property investment.

A good investment property management company can really help optimise the occupancy rate and return on investment of your rental property.

Moreover, it allows you to invest carefree and passively without being confronted with the operational tasks.

Attractive household facilities

When you are looking for a good investment property, you should pay attention to the attractiveness of the property's facilities.

Tenants are looking for a property in good condition with certain facilities and features that make their lives more pleasant and comfortable.

Some examples of attractive facilities and amenities for tenants are:

• A garden or balcony
• Several bedrooms
• Sufficient glass areas for pleasant natural light
• Climate control with integrated air conditioning
• Garage for parking cars and/or bicycles
• Separate laundry room for washing machine and/or tumble dryer
• Parking space(s) inside or outside
• Built-in dressing room and other cupboards for clothes
• Well-equipped kitchen with plenty of space and amenities
• Separate dining room
• Dry cellar room for storage of wine, liquor and other items
• More than one toilet and more than one bathroom
• A bathtub to complement a classic shower
• Bathroom furniture with 2 sinks instead of 1
• Sufficient storage space
• Terrace with enough space to put rubbish bins outside

Such amenities and facilities attract tenants and also ensure that tenants are not easily tempted to move.

Moreover, these facilities also add value to the investment property and enable you to ask a higher rent.

Property in good condition

As an investor, you prefer to buy an investment property that is in good to excellent condition.

Repair and maintenance costs can have a huge impact on the cash flow and profitability of a property for rent.

So when you analyse a rental property for sale, you should definitely carry out a thorough inspection to know the condition of the property.

Are you not technically proficient enough? Do not hesitate to call in a professional for the inspection.

A thorough inspection and valuation may well cost a little money, as it can help you avoid a lot of trouble in the future.

In other words, a good investment property is a property that is in good condition and only needs minimal repairs and refurbishment.

A property in poor condition to refurbish can take a lot of your effort, time and money before it is finally ready to be rented out.

Conclusion: Buying, renovating and renting out or selling is not for everyone and certainly not for beginners (it is for experienced property investors).

You do not want to exhaust your emergency funds with major (unexpected) repairs shortly after you have bought an investment property.

Around the median price in a specific neighbourhood

During the search for a good investment property, it is important to make a distinction between the value of a property and the asking price.

In other words, even if you can afford the property financially, this does not mean it is a good property deal.

You absolutely must find out whether the property in question is really worth the price.

To avoid paying too much for an investment property, you should carry out a comparative market analysis to find the fair market value.

In other words, you should make an analysis of other similar properties in the same neighbourhood that have recently been sold.

A good investment property is priced around the median of the specific neighbourhood in question. So avoid outliers in terms of price and go for an average property.

Located in a growing real estate market

The location of an investment property is the most important factor to consider.

The location of an investment property has a strong influence on the demand for rental properties, the quality of the group of potential tenants, the optimal rental strategy and the ultimate return on your property investment.

If you buy an investment property in an underdeveloped and/or deprived area, it will be difficult to attract tenants.

The chances of the property substantially increasing in value are also limited in such areas.

And if the housing market in question undergoes a correction and deteriorates, the value of the property will also fall.

Buy an investment property that is in an emerging market. As the property market grows, so will the average rent, the quality of the tenants and the value of the property.

Remember that the return potential may vary from country to country, from city to city, from province to province, and even within the same city or region.

It is therefore important that you study the location of the investment property carefully, both on a national and a regional level.

Indicators of good investment locations

Here are some of the best indicators of interesting locations for investment properties:

• Large and growing population
• Firm pipeline of planned developments (public facilities)
• Growing economy and labour market
• Good public transport facilities (bus, tram, metro, train)
• Favourable tax rates in the area of real estate
• Acceptable insurance costs
• Good and wide range of amenities (supermarkets, schools, hospitals, restaurants, gyms, parks, etc.)
• Favourable legal framework with rights and protection for owners/landlords
• Low crime rates
• High tenant demand combined with low supply of quality properties for rent

Good cash on cash returns

Apart from the cash flow of investment properties, you also need to determine how much profit you can generate in relation to the amount you have invested.

This means that you need to estimate the return on investment.

The most common measure of return on investment is the cash-on-cash return.

This cash on cash return takes into account the way the investment property is financed.

In principle, most investors will use a mortgage or bullet loan to partially finance their real estate investment.

The cash on cash return is thus calculated by dividing the annual net income (after deducting expenses) by the total money invested out of pocket.

A well-let investment property can easily deliver a cash on cash return (ROI) of 7.5% or more per year.

Budgetary feasibility

It is important to know how much you can spend on a buy-to-let property.

If desired, you can work with financial leverage (part of your own contribution and the rest of the purchase price financed by means of a (mortgage) loan).

Regardless of how you would finance, you should find investment properties that fit your budget.

It is important to always keep some money in reserve for unexpected expenses and to absorb setbacks such as vacancies.

Buying an investment property that is outside your budget is unwise because it can cause a lot of financial stress.

Buying investment properties to let: What to look out for?

Decide rationally without emotions

Successful real estate investment starts with knowing what makes a good investment property.

So always remain rational. The last thing you should do is get emotionally involved. This is not always obvious, especially when you are about to buy your first investment property [AVAILABLE SOON] and everything is very exciting and new.

To ensure the best return and avoid possible financial loss, you should always consider the above factors when analysing an investment property for sale.

Be careful, however, not to become paralysed by indecision due to analysis paralysis.

For example, do not try to find the very best buy-to-let property because technically, it simply does not exist.

Try, however, to find an investment property with many of the above characteristics and features.

Due diligence is important

Conducting a thorough due diligence is one of the most important aspects of investing in real estate.

Due diligence is a targeted investigation of a specific property that is being considered for purchase or sale.

The study carried out by the investor must give a definite answer as to whether the information received about a particular property is correct or not.

As a private investor, you should also pay attention to possible pitfalls and problems that may prevent you from achieving your goals.

Beware of counterproductive due diligence

But make no mistake: maniacal due diligence can be very counterproductive!

Because effective due diligence is important, many potential investors wrongly assume that every question must be asked.

And that all questions should be reviewed and verified before proceeding to effectively acquire the investment property.

This often leads investors to make a decision that takes them away from their goal.

Efforts put into research and study without having an option on the property can result in many hours, days or even weeks of wasted time.

Good investment opportunities are also noticed by other investors.

This means that a due diligence maniac who spends days or even weeks investigating every nook and cranny of a property very often misses out.

Other investors who are quicker off the mark have long since concluded a contract, so the opportunity has disappeared.

Go for effective due diligence

The keys to effective due diligence are the following:

• Have specific market knowledge of a certain area,
• Familiarity with the type of property
• Knowing the parameters the property must meet to achieve your personal investment goals

So if, after the initial basic research, you feel that things are going well, you can safely move on to negotiations.

There are always hijackers on the coast and so some decision speed is advisable.

Other frequently asked questions about investment properties

What is an investment property?

In reality, there are various types of investment properties, including rental properties and investment properties.

Let's start with the analysis of the term rental property. A rental property (also known as a rental object) is a property that you buy to rent out and earn rental income from.

An investment property, on the other hand, is a property you buy with the aim of making money.

An investment property can therefore be used as a rental property.

But an investment property can also be purchased with the aim of increasing its value and selling it with a capital gain.

You may be carrying out property improvement works or major renovations or subdivisions.

So every rental property is an investment property but not all investment properties are properties to rent out.

What does an investment property cost?

The purchase of real estate comes with all kinds of costs.

• Purchase price
• Registration duties or VAT calculated on the purchase price
• Cost of valuation by professional appraiser if applicable
• Property survey
• Legal fees
• Costs of taking out a mortgage
• Honorary salary of notary public
• Brokerage fees if applicable, etc

In addition, you should also take into account various operational costs, such as:

• Rental agent fees
• Mortgage interest
• Costs of refurbishment works
• Insurance premiums
• Periodic safety checks (of the boiler or of the air conditioning system)
• General maintenance costs of the building

Finally, you should also consider income taxes due on your net rental income in the country where the property is located.

Each country has specific tax rules for rental income so generalising is impossible.