New to the buy-to-let game? About to take the first steps to becoming a property investor?
While this is an exciting journey, it can feel overwhelming at times! There’s a lot to learn when you’re just starting out.
To ensure you stay on the right track, we’ve got some tips on property investment for beginners. This advice should help guide you along the way!
Property Investment Basics
Before you start looking at properties – you need to work out what type of property investor you want to be.
Decide Whether You Need Partners
Do you want to invest alone, or with others?
If doing this by yourself, any money you make from letting out the property will be yours alone. However, some people are not in the financial position to do so.
So, first things first, ensure you know what you can afford before you embark on the journey!
How Will You Finance Your Investment?
During the planning process, your investment strategy should take into account exactly how you’ll afford to purchase a property. This should happen before making an offer on a house.
There are a number of different things to consider, including:
- Stamp duty land tax
- Getting a mortgage
- The day to day running of the property
- Current property prices on the market
- Whether now is a good time to buy
- Survey costs
- Solicitor fees
Hopefully, sooner rather than later, the rental income you generate will ensure cash is flowing into your pocket. However, the upfront costs involved with buying a property should not be overlooked.
What Type of Investor Do You Want to Be?
When investing in property, you have a number of options open to you. This could be:
- A new career path
- Your main source of income
- A source of extra income on top of another job
With direct property investment, it helps to have a long-term plan. Imagine yourself in five years’ time. Where do you want to be?
More and more people are choosing to rent over buy. This presents an exciting market for investors to take advantage of.
How to Invest in Property
Once you’ve got the basics sorted and know what type of investor you want to be, it’s time to get started.
But, that can be easier said than done! So, here’s how to find a good investment property:
Choose Where You Want to Invest
Where do you want to invest? Decide early-on.
Here, research is key. There are a number of things to consider, including:
- The average cost of buying a house
- The average rental yield in the area
- The type of tenants in the area (families, students etc.)
- Whether the area is up-and-coming
- How close you want the rental property to be to your own home
Once you’ve decided on the area, it will make choosing the right property to invest in much easier. However, it can be more difficult than anticipated to get to this point!
Identify Your Target Tenant
Who do you want to rent to? It helps to have a target tenant in mind.
For example, if you invest in a studio flat, it’s unlikely this will appeal to families. However, in an area where many residents are postgrads, this could be perfect.
It can be tough to narrow it down – but it’s worth it. Remember, the area you’re in should play a huge role in deciding your target tenant.
Ask yourself who you would and wouldn’t let to. Would you consider renting to students? This may widen your options, particularly in an area with a number of universities.
Make Sure Rental Returns are Competitive
The best way to start investing in property? Be on the lookout for high rental yields.
This can vary place to place, as everywhere in the UK is different. But, these tend to be favourable locations where there’s a high demand for rental homes.
You’ll want to ensure that, over time, the property can not only pay for itself but make you a profit. This includes any extra charges, such as maintenance.
Look for Opportunities to Add Value
The UK property market is constantly changing! Even some of the best estate agents can’t predict what will happen next.
House price growth is one of the main reasons to invest. When you eventually come to sell the property, you want to know you’ll make a profit. One way to ensure this is by looking for ways to add value:
- Consider ways to refurbish/renovate the property
- Choose an up-and-coming location
The best property investments are those which look to the future, rather than just the here-and-now.
Property Investment Advice – Understanding the Risks
If you’ve decided this is the path you want to take, you’ll need some property investment tips to help you along the way.
Ensure you’ve considered these risks:
- Rent is not always guaranteed – which may mean you can’t afford mortgage repayments. Always try to prevent void periods at all costs
- House prices can fall
- Difficult tenants can cause a number of issues, such as damage to the property
- Major house repairs can be extremely expensive
Property Investment Guide – The Potential Returns
Despite some inevitable risks, the world of buy-to-let is an exciting one, and can deliver huge returns.
This market can be a very profitable one! Plus, becoming a landlord is a rewarding career path to follow.
Protecting Your Investment
One of the most important factors to consider? The ways to safeguard your rental property.
Having a comprehensive, detailed inventory is one of the most significant elements – essential for protecting both landlords and tenants.
Unsure how to get started? No Letting Go can help. From check-in to check-out, we’ll make protecting your investment our top priority. Find out more about our inventory services here.