Investing in property can be a lucrative career choice or make a useful additional income alongside your day job. However, before you decide to take the plunge, consider whether or not it could be the right decision for you and what it would involve. If you’re deciding whether to invest in property, take a look at the post below as we’ll be listing all the things you should consider before deciding to invest. Keep reading to find out more.
Do You Have The Budget?
The first thing you need to consider is whether you have enough of a budget for property investment. It’s not just the initial costs of investing in a new property, but also renovation costs, maintenance costs if you’re going to be letting it out, and all the other costs involved with owning multiple properties that you need to take into account. Not only do you need to consider the financial costs of owning property, but also the cost of your time. Whether you’re going to be involved with helping out on flipping a house to sell on or you’re going to be renting out property to tenants, they can both put a significant strain on your time. If you’ve already got a full-time career that you’re focused on, then property might not be the most ideal form of investment for you.
Flip Or Buy-To-Let?
When investing in property you need to decide whether you want to flip houses (renovating them to a higher standard to sell on for profit) or whether you want to invest in buy-to-lets. There is no right or wrong answer, and it very much depends on your personal preferences. You might not even know yourself until you’ve had the experience of doing both. Some people choose to start out with flipping houses in order to build up the capital they require to invest longer-term in buy-to-lets, for example. Flipping houses does mean there is the opportunity to see rewards for your hard work in a much shorter period of time. However, buy-to-lets offer the opportunity for long-term income and increased assets. With both flipping houses and renting out a property, you can choose to be as involved or uninvolved as you please. The benefit of being heavily involved with flipping houses and getting stuck into renovation work is that you can help to save some money on paying contractors which means more profit when you come to sell. Similarly with renting property, you can avoid the costs of letting agents if you choose to be more involved and in communication with tenants yourself. You can learn more about investing in buy-to-lets on the 24Housing website.
How Can You Diversify Your Portfolio?
Ideally, once you have more experience in the world of property and a few projects under your belt, you should try and diversity your portfolio. This helps to provide you with better financial security as you will have a mixture of buy-to-let properties as well as potentially a few house flip projects on the go as well. For example, if you suddenly find one of your buy-to-let properties vacant and no rent coming in, you will have other properties bringing in money to bridge the gap in the meantime. The property market, like any other market, is subject to changes and fluctuations, so having a diverse portfolio is one way of ensuring your money is at less risk. Generally, making sure you have long-term investments in place is a good way to help lower risk and safeguard your investment. Fluctuations in the market can occur, but they usually tend to even out after a certain period of time, so the effect will be felt less in a long-term investment.
Is There An Opportunity For Capital Appreciation?
Is There An Opportunity For Capital Appreciation?When choosing your longer-term investments, make sure you do your research into their potential for capital appreciation. For example, areas that are receiving investment are a good option for choosing to buy property. They usually allow you to buy the property at a reasonable price, but their value will increase over time. Ideally, you want to be adding properties to your portfolio that have the potential to build capital appreciation over time so that you will have higher-value assets in your portfolio or more potential for profit should you choose to sell.
Have Your Conducted Research On Locations?
To help you find the kind of properties that have the potential for this capital appreciation, you need to be researching the areas in which you want to invest. Cities such as Liverpool and Manchester, for example, are good options when it comes to investing in property. Or further up north, Newcastle-upon-Tyne and Edinburgh are good places to consider for investment. With enough work to improve the property or enough time holding onto it, there is the potential for either a good short-term profit or excellent long-term investment that can see good capital appreciation. You will also need to consider whether the location is convenient for you as well. If you’re going to be heavily involved in the investments, you will need to be able to commute to them easily.
Are You Familiar With The Legalities?
When you become involved in property investing, you need to be familiar with the laws and regulations surrounding being a landlord or carrying out work on properties. For example, you need to research the responsibilities you will have as a landlord and the legal power your tenants hold if you fail to meet them. You will need to equip yourself with a good solicitor that specialises in property in order to help make sure you’re legally well prepared. It’s also a good idea to become familiar with the rules you have to follow as a landlord so you can avoid any mistakes and potentially very expensive legal action from tenants. Make sure you have a solid and well-put-together contract drawn up between yourself and the tenants making it clear what both your responsibilities are towards the property and renting it out.