Imagine the scene: you have decided to become a property investor and are now excited about what looks like an exciting future of buying, letting out and, ultimately, making money from property. However, you have just hit something of a wall: you can’t make your mind up about which property you should buy first.
Here are a few factors to weigh up as you mull over buying a specific property.
Do you need to make money quickly?
If so, you should probably completely forget about investing in property. It not only requires significant financial outlay right from the start, but also doesn’t tend to bring returns that can be accessed quickly. You can allow people to rent your property – an arrangement which would give you an additional, regular supply of income. However, you would need to first find tenants.
As demand for property – whether to buy or rent – can fluctuate, property investment should be treated as a long-term investment. That way, when the market is depressed, you can simply wait for it to recover before you sell. However, the process of selling a property will itself take a while; therefore, you won’t necessarily make a lot of money quickly even when the market is flourishing.
Will you be able to pay all of the necessary costs?
Various charges to consider on your property investment journey include the fees you might need to pay estate agents, surveyors and solicitors. Any additional costs associated with maintaining and managing your properties should also be factored in.
Those costs could include, should the freehold not be outright yours, extending the lease; the Money Advice Service cautions that negotiating this could be time-consuming. Will you have enough time free for taking care of this?
Would you be able to afford the mortgage?
Mortgage lenders should enable you to calculate the monthly costs of a mortgage, money.co.uk states. If those costs outweigh what you know you would have coming in each month, you might have to turn your back on property investment – or, at least, investing in the particular property or area that you are currently eyeing up.
If you are letting out, will the rent be sufficiently high to help meet your costs?
While letting out properties could, of course, bring in money to help you with upkeep, you should carefully look over the probable outgoings to make sure that the rent would be high enough. This isn’t necessarily to say that the rent should pay for absolutely every aspect of looking after the property. However, it might be unlikely to cover the repayments on your buy to let mortgage.
While raising the rent is an option, this could ultimately bring the rental costs above what the property is genuinely worth – and so leave you without any willing tenants. Therefore, limiting your investment to properties likely to deliver the best return on that investment would be a wise strategy – and consultants at Flambard Williams can help you to identify the best opportunities.