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Tips on Investing in property

Investing in a property is a habit which pays dividends in the long run if the investor spends his or her money well. Easier said than done, and some forethought, planning and good advice usually come in handy. Very often the first question which springs to mind is “Where does one start?”

We are considering the topic of investing in property in Malta here with the intention of providing some guidelines for those of you who are still toying with the idea but are not quite sure how to go about it.  According to the recent Real Estate Insights Survey, 17.9% of Maltese own a second property in Malta or Gozo which may provide as further encouragement.

  1. A first major property investment is always a big huge step in a person’s life. It is usually akin to a leap in the dark but in actual fact, it really needn’t be, if one is well informed. Shop around first by checking Maltese real estate agent lists of properties to get a rough idea of current going prices. Some estate agents in Malta have buy to let property lists that will assist whereas if you are only looking for a second residence for vacations or weekends, buy to let investments lists may also serve you well as a benchmark.  The reason being is that these properties will have an excellent return on investment between 4% – 7%.  These lists of homes will help you decide on what kind of property falls within your budget and suits your dreams and requirements. Don’t worry about making compromises – a first investment is very often about exploring and understanding what you should buy, in terms of affordability, return on investment and what you may have in mind as your end goal.  It may turn out that you are better off to buy multiple units at your budget due to a better return on investment.
  2. Check your budget, not just by counting your pennies, but also by checking with your local bank manager about the possible extent of any bank loan you might need to take. A lot depends on your own income, the kind of employment you have, your age, your family responsibilities, etc. For instance, if you are still in your 20s, your loan will certainly have a longer re-payment programme than it would have if you are turning 50. Whilst you may have cash in hand to actually purchase the property, you may consider getting a bank loan that will allow you to renovate or furnish your property to a higher standard. This will ultimately place your finished property higher on the re-sale ladder.  Your estate agent in Malta should have contacts of bank managers which may further assist you.
  3. Don’t exaggerate in your first brush with property purchase. If you can only afford so much, make sure you start viewing properties within that budget. Instead of going it alone, it would be wise to make contact with a professional in real estate, who will help you by selecting properties which fall within your budget and choice. An estate agent that is specialised in these types of investment properties will be able to guide you comprehensively.
  4. Will you be living in your property or will you be using it as a rental? You might initially consider renting out so that you may garner some immediate income. Possibly to students or you may even consider short lets – this might be an ideal scenario for you in that you may utilise the property during your own chosen dates and rent it for the rest of the year. You may also choose to rent out a couple of rooms whilst doing up the property.
    This will also help you re-pay your loan whilst giving you flexibility to finalise your project.  Remember that most good investments start out as small projects which are affordable to buy, affordable to renovate, lived in for a short while, and then may be sold at a small profit. Such a small profit will allow you to purchase a larger property and start a new project over again
  5. You might decide to invest in a commercial property rather than a domestic one. Remember that buying a shop or office space may be prolific, especially if you find the right location at a good starting price. There will be permits and licenses to pay, so best to check as this could also effect the official permit for renovation. This sphere will require different research, since you would need to discover what kind of commercial entity could bring in most money in a regular manner, and in which area. Many opt for a commercial investment over a domestic one, since this might possibly entail less of a starting monetary output.
  6. Most of those who eventually become professional property investors start this way. Starting small and working your way up the property investment ladder is a sure-fire way of becoming financially independent over time. Remember however to always aim for quality ownership, investing in good materials and workmanship, respecting neighbours and eventual buyers. By avoiding slipshod work and cheap materials you will be investing pride of place and this will pay dividends in the long run.

It is important that you consider all angles and get certain advice from a real estate agent in Malta.  As mentioned above a real estate agent will have the experience as well as the properties in hand to make you investment journey a smoother process.