Investing in property can prove to be very lucrative – but it can also be complicated.
If you’re considering starting out in the world of property investment, it’s worth considering a few of the factors that might influence your chances of success.
There are a range different property investment options, as well as a number of property types you can put your money into. It’s about picking what’s right for you level of experience and expertise, as well as what property is available within your budget.
Generally speaking, there are two ways of making money from investment in property. You might decide to buy something with a view to selling it later for a profit (perhaps improving it along the way). On the other hand, you might seek a regular return on the investment, in the form of rent.
Flipping
A ‘flipped’ property is one that’s bought and then sold, usually within a short space of time. It’s popular when the property market is buoyant, and prices are on the rise.
If you’re only going to be living in a given area for a short time, then it might be that flipping suits your lifestyle – you can invest some money into the property, and a little more into renovations, before selling, hopefully for a profit if you’ve done your homework and your sums thoroughly.
Admittedly, the current downturn in the housing market might have made this a less attractive proposition – but there’s still money to be made by renovating and selling for a profit, as long as you know what you are doing.
Many homebuyers will pay a premium for a house that’s freshly decorated and ready to move into. If you can deliver that, then you’ll have a better chance of achieving a quick sale close to the price you’re asking.
Make sure you fully understand the tax implications before getting your hands dirty in this market – doing your sums upfront and taking professional advice could save you a great deal of financial grief further down the line.
Buy-to-let (BTL)
If you’re going to be buying with a view to letting, then there are a number of things to bear in mind.
First, you’ll need a larger deposit than you would if you were shopping for a standard residential mortgage. You’ll also need to be making more. The interest rates are higher, and commercial BTL mortgages aren’t regulated by the FCA.
There are also additional tax considerations to bear in mind – although you can mitigate some of these, to an extent, by making the purchase through a limited company.
The rental sector remains vibrant, even at a time when living costs are being squeezed. If you’re creative and willing to work for it, there is still a respectable level of income through buy-to-let. However always seek professional advice before jumping straight in and make sure you understand the demand for different property types in your area.
Using Letting agents
If you’re short on spare time or live away from your renal property, then you can entrust much of the legwork to a specialist letting agency. This organisation will take care of things like collecting rent and conducting regular inspections of the property on your behalf.. Reputable letting agencies will of course charge for their services, however in return they can make the process of renting out your property much simpler.
If you are relatively new to the lettings market, then an agency may be a sensible option unless you have the time to regularly deal directly with your tenant(s) on a one to one basis.
