Investing in property is a great income opportunity for you. The world of real estate has produced many wealthy people, who have made their millions by taking a chance on a developing property. However, it isn’t as simple as it seems, and the notion of investing in property is quite a lengthy and daunting investment. Here at We Buy Any House we have compiled our top ten tips on how to invest in property.
Step One- Deciding If You’re Cut Out to Be a Landlord:
Although becoming a landlord might intrigue you due to the appealing nature of the income, don’t let the job fool you for something it isn’t. Opting to become a landlord is a great way to earn a large income in a relatively short period of time, however, the job isn’t always easy or glamorous. The first step to investing in property is deciding if you are cut out to be a landlord, in a quite competitive and demanding industry. Alongside choosing the right property for you to invest in, you will always have to deal with tenants and their issues, in addition to property maintenance. You have got to ask yourself questions such as:
- Are you capable of fixing small maintenance issues?
- Are you going to hire a property manager to oversee the property?
- Are you able to be direct when it comes to finances/owed rent?
- Do you have the right people skills to be able to communicate with the right people?
Step Two- Research Investment Options:
Just like any industry, there are many ways to enter the world of property as an investor. Whether you decide to directly buy a home or commercial property, it’s always a good idea to do your research and see what is out there before you begin making any big commitments. Decide what type of investment will suit your circumstances and needs from a business perspective. A few types of property that you could go for include:
- Property development
- Buying a new-build which you intend to sell on
- Investing in a property abroad
- Buy-to-let investments
- Real estate investment trusts
- Property investment funds
Step Three- Considering the Risks:
As with every new opportunity, there is a certain amount of risk involved. However, frankly, property is perhaps one of the riskiest industries to invest in, as the whole market can fluctuate very quickly and dramatically. It’s an industry that has trends, and while your property is thriving one minute, in the next it can be deemed as problematic. Additionally, the state of the current climate massively impacts the way a housing market functions. If there is a government crisis, health epidemic or affecting global piece of news- then this will undoubtedly affect the property market- a notion which has been evident throughout the Covid 19 pandemic. Before entering the world of property investment, it’s important to be aware of the risks- and how you may struggle financially sometimes.
A key piece of advice is to do your research and perhaps invest in different industries, as then you can be covered if there is a crisis in the housing industry.
Step Four- Assessing Whether You Can Afford to Invest in Property:
Investing in property is not going to be a journey that goes easy on your bank account. You will have to ensure that you have the right income and financial stability in order to become an investor. Budgeting is a huge part of it and ensuring that you have enough money saved to cover you throughout the times that aren’t so great. However, there are other costs you should account for, which include:
- Calculating Income and Expenditure:
For a few months in advance, it’s important to calculate your average income and your monthly outgoings. It’s important to do this as it will allow you to see how much you have spare and how you can use this towards your investments. You will also need to see if you have any spare money which can cover you if things go wrong.
- Calculate How Much Capital is Available to You:
Alongside working out your disposable income, it’s a good idea to work out what other money is available for you to invest. This includes everything from ISAs, savings accounts, shares, unit trusts and premium bonds. It’s important to work out how much you have exactly, what returns this pay, and if there are any restrictions on what you can withdraw.
- Compare Mortgage Deals:
Even if you were buying this home without the intention of an investment, it’s still worthwhile to compare mortgage deals and rates between companies. Once you have all of the necessary expenses put in place, you will start looking at mortgages and what is available to you. Remember to factor in interest rates and how you are going to make a long-term profit when you are financing your mortgage payments.
Step Five- Finding the Right Property:
Finding the right property doesn’t just mean the walls surrounding the building. It also means your tenants, location and the financial aspect that exists alongside this. There are a few key things to do throughout this time period, which include:
- Research Tenants:
As part of the law, all landlords must treat all tenants’ prospective tenants equally. This is known as the Federal Fair Housing Act and is put in place to prevent any discrimination against an individual’s class, race, colour, national origin, religion, sex, familial status or disability. However, you are allowed to decide if this tenant is right for your property based on their intentions as a tenant.
- Research Areas:
A key point of interest for prospective buyers will be the location of where your property is. More than likely, the are you choose for your property will coincide with the type of tenant you are trying to attract to your home. But additionally, you also need to think about what you want as a landlord. If you’re wanting to keep a close eye on your property, then it’s a good idea to perhaps choose a property that is close to you.
This article was written by a quick house sale company We Buy Any House. If you’re wondering “how can I sell house fast?”, head to the We Buy Any House website for more information relating to all property related enquiries.