Top Tips for Investing in Residential Property
Starting with anything new can be a daunting task, especially when it comes to investing in property. The thought of spending thousands of pounds is scary at the best of times. So our overall advice is to be as prepared as you can. Below, we have put together a short list of top tips and things to consider when investing in residential property.
1. Finances – can I afford an investment property?
Before jumping head first into residential property investments, check your finances. Essentially, can you lock away a significant amount of capital for a considerable period? Having adequate finances will give you more freedom and confidence to invest in residential property successfully.
2. Choose a promising location
Promising does not mean most expensive or cheapest. Promising means a place where people would like to live and has seen constant growth which can be for a variety of reasons, such as regeneration of the area which may attract new buyers and businesses to the area. What are the travel connections like? Is it easily accessible to a city and so attractive for commuters? It may sound simple, but it is one of the most important things and one of the top tips we can give when it comes to choosing your investment location.
3. Gather a team of professionals
Getting started when investing in residential property can be very simple with the right people behind you. As a first-time investor, there will be several aspects which will require the assistance of a solicitor. They will help with the legal aspects of buying and investing in property such as contracts and conveyancing. An accountant may make book-keeping easier and help you sort out taxes while a financial adviser could help you achieve long and short-term goals. They may cost a little bit but they are worth it. When investing in residential property, for any investor, the aim is to keep maintenance costs down. So, reputable builders and decorators are also worth their weight in gold if you need to make changes to the property.
Read here how our Life Tenancies are extremely low maintenance
4. Know the value of what you are buying
Do your research may seem obvious but is another top tip of ours. What has the property sold for before? How much has the location grown in value in the past 5 years? With these bits of information, you can get a better, more accurate purchase price. For most residential property investors, they are unlikely to be reliant on the sale of a property to fund the purchase. This can be a major asset when negotiating a discount as you are not part of a chain and represent less of a risk. The less you pay below the RICS valuation for the property, the more money you will make in the long term.
5. Have a strategy
Have a clear objective for what you want to achieve from your investment. It helps give you direction. Answer such questions as are you looking for a monthly yield or am I looking for a longer term investment with capital growth? Knowing this will help shape the property investment you purchase.
6. How hands on do you want to be
It varies from investor to investor. We find that many are looking for a property they can buy and just leave to grow in value. Of course, there are many property management companies out there nowadays but if you wish, you can be totally hands on. Be aware that without property management, investments can take up a lot of time and effort so if you choose that avenue, be fully prepared. Are you willing to spend hours, days, even weeks sorting out any array of issues?
With the right knowledge and research, property investing can be easy and highly profitable. Following a few simple rules/checks each time will help keep the process clear and simple. Whether a seasoned pro or a novice investor, Life Tenancy Investments provide a hands-free alternative to more traditional property investments such as Buy to Lets.
Now you know what to look for when investing, want to know where to invest in 2018? Read our blog here.
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