Tips for real estate investors
If you want your money to work for you, investing it in real estate in Malta could be a more secure source of passive income than other investment possibilities.
Plus, there is a wealth of property for sale in Malta, especially homes that serve as a good rental investment, making the market very accessible.
Research the market
If you want to be successful, you need to delve into the subject. Before you decide to buy the property for investment or rent out an already-owned property, it is wise to do some research. It is a good idea to check out the databases of local real estate agencies to get a good picture of the average monthly rental fees in the area you are interested in.
Also, decide on what kind of tenants you wish to attract: is it single individuals who are studying or are in employment, families, or multiple tenants in one rental unit? Renting out to a single family is more stable. These tenants are usually more appreciative and they have a better sense of ownership, meaning they will take better care of the property. Multiple tenant rentals require more property and tenant management and there might be more repairs to be made, but the profit could be higher as there are more tenants paying rent.
Which type of tenant is the property suited for? Usually the layout of the property gives an indication of this. But then there are your preferences too. If you still need to purchase your rental investment, base your search for the property on the type of tenant you wish to cater for. If, on the other hand, you already own a property and wish to start renting it out, explore your options.
Different areas might appeal more to a particular category of people. For example, a student studying at University of Malta is going to prefer renting somewhere within walking distance in or near Msida to avoid the expense of the daily commute. Families prefer quiet towns, which are close to good schools. People working low-paying jobs will seek residence in towns which typically have lower rental fees, looking for homes offering the possibility of multiple tenancy as it works out cheaper for them.
It also makes sense to invest in an emerging neighbourhood where a project is still underway. It might have potential as it will attract people to the area due to the opportunities it has to offer. There is also the possibility of you maximising your profit as the purchase price, in the case where you still need to purchase the property, might still be lower than in other areas.
Run it like a business
Renting out a property is not just about focussing on the money you will get at the end of the month. It’s also the journey that will get you there. Treat the investment like a business and run it like so.
Make sure that if you are investing in a property, it has the potential to turn over a decent profit. Take into consideration the expenses you will incur – both to renovate it before you greet the tenants, and for its upkeep during the tenancy period. Successful rental investors often recommend that you set aside an amount to be used in case of repairs or replacements. Also, do not forget to factor in the tax you need to pay on the income. In the end, you need to have made a good enough profit for it to be worth your while.
Be aware of your legal and tax obligations and submit all the paperwork with the authorities. File and keep safe for accounting purposes all the documents pertaining to the property, invoices for works and maintenance, and agreements entered into with tenants.
Keep expenses in check
Probably, you will need to spend money before the first tenants move in. Set a budget, and stick to it but at the same time expect to go over it. Nonetheless, when you are choosing fixtures, fittings and finishes there is no need to go over the top; it’s ok to go for the middle of the road, unless tenants are paying for an ultra-luxurious home. The rental should be homely and modern but it doesn’t mean you have to spend a fortune.
And inevitably, you will need to spend money on repairs and on its upkeep. Whilst you should keep aside a sum to cover for them, do try to help lessen the costs by dealing with problems right away before they become more serious and, therefore, more costly.
Build a reputation
Businesses flourish and thrive when they are based on fairness and honesty. And this applies to rental investments too. Your reputation will take you far if you deal with your tenants in a fair manner and honour your commitments.
Maintain a good relationship with the neighbours of the rented property. In Malta, due to the nature of the building materials, it’s possible, for example, that water leaks appear first on your neighbour’s walls before they surface on yours. Being on friendly terms with your neighbours means that you can solve these issues without major inconvenience.
Build a network
Get in contact with trusted individuals who can help you out in a reliable and efficient manner when you need it. When you are in the market for a property, save the contact details of those estate agents who go the extra mile to understand what you are after and who have proven to be worth your time. Be on the lookout even for a reputable handyman and electrician – you will need them soon enough to carry out repairs, unless you have the time and skill to do them yourself.
Invest. It’s worth it
Renting out a property in Malta can provide a good passive income as there will always be a market for rental units. Speak to one of our specialised estate agents at Zanzi Homes who, with their years of experience in the real estate market, will help you maximise your investment opportunity. You can find out more about us at https://www.zanzihomes.com/