Right now, property investment seems like one of the most profitable ventures to be involved in.
Offering a solid long-term investment, property can provide a consistent and reliable income for many years with minimal risk and pressure – depending on your approach.
For those just starting out, though, it can seem like a very daunting experience.
Here are 4 tips and tricks that’ll hopefully give you a jumpstart!
1. Figure Out What Kind of Investor You Want to Be
Becoming a full-time landlord means you can own and manage rental properties as a primary source of income, but this may also mean having to leave behind your current primary source of income.
For those not really enthused by the prospect of abandoning your career, then, as RWInvest suggests, working with a property management company may be your best bet.
These companies can take a lot of pressure away from an investor.
One of their primary duties is to directly deal with whatever issues your tenants may have, which removes the need for you to be called up whenever there’s a problem with the property.
This often proves to be a relatively hassle-free approach and is perfect for those who want to take a step back from the time-consuming day-to-day duties and demands of owning a rental property.
Once you determine what kind of investor you want to be, you can figure out whether you need to hire a property management company to assist with investments.
It’s all about whatever best fits your lifestyle, so spend some time figuring out what works for you!
2. Create A Workable (and Realistic) Budget
Before buying a property, you must create an intensive property investment budget.
Having a budget in mind will speed along the process and also assist in finding the best possible property for your needs.
After all, you don’t want to use your property investment funds to pay above your means for a property that may have the same potential behind it as a property with a lower price.
Essential costs to think about are:
- The property price,
- The monthly repayments (If using a mortgage),
- The reservation fee,
- Insurance (such as rental insurance).
And of course…
3. Remember to Pay Tax!
Again, as a property investor, you must factor in all the costs of owning and maintaining a rental property.
At the top of your list should be ensuring that you know all of the many taxes involved.
With the UK property market, this includes:
- Income tax
- Inheritance Tax
- Stamp Duty Land Tax
- Capital Gains Tax
4. How to Pay? Consider Mortgages
Now you have some understanding of what to pay, it’s probably best to figure out how.
Having the cash to buy out a property at hand is not necessarily a luxury that many have.
The best route for those who don’t have the money to spare is to consider utilising a buy-to-let mortgage.
Just like a regular mortgage, you can take out a loan on a buy-to-let property.
And again, like any other mortgage, this involves paying a deposit and then repaying back it in segments through monthly repayments.
Different providers have varying interest rates, but it all depends on how long you want the mortgage for.
As a guideline, the minimum deposit you need to put down is typically 25% of the property’s market value.
Overall, the more you have for a deposit, the lower your repayments will be in the long haul. Your chances of securing a mortgage will also be increased.
This is, of course, just a very brief introduction to the world of property investment.
If you take anything away from this article, remember this:
Research is key.
It’s critical that you keep up to date with all the latest trends.
Be smart with your money, and thoroughly investigate every aspect of a prospect before making your final decision.
All in all, though, if you play cards right, you could end up with a winning investment!