We’ve been through some of the excellent benefits of investing in a property before on our blog. But how do you go about getting started? There are several things you need to know before investing in anything, and property is no different. Here is our ultimate guide to reveal everything you need to know.
Why Are You Doing It?
First of all, it’s vital to have a plan in place. Why do you want to invest in property? Are you looking for a short-term gain, or looking to stay in the game for the long-term? Are you willing to invest in renovations, or do you have the time it takes to rent it out? It sounds obvious, but don’t just buy a property for the sake of it, no matter how great a deal it seems to be. If you don’t have a robust plan in place, it’s going to bite you in the behind at some point down the line.
Where Are You Doing It?
Property is all about one thing: location. It doesn’t matter how much you pump into a home, the amount of return you get from it will be limited by its postcode. For example, you can buy a £350,000 home in a £500,000 area. You can make £300,000 of improvements to the property, but you won’t be able to sell it for anywhere near £650,000. So, you have to research the area well before leaping into any property investment. Look for up and coming areas that your local council is planning to improve. It’s areas like this that tend to give you the better returns.
What Are You Investing In?
There are plenty of different ways to invest in property. You could buy it as a holiday home, for example, or go down the buy-to-let route. Or, you could invest in a business property and rent out office space to local companies. You can even invest in care homes or student properties. Take a look on some of the multitude of ways you can start investing in property. The one thing to remember is that you have to know a little about the market you enter. For example, if you are going to go for a buy-to-let property, you need to know about the local rental rates and brush up on landlord regulations. You’ll also need to develop close relationships for local tradespeople that you can call on when things are broken. There’s a lot more to investment than just handing over your money.
What Are The Risks
As any successful investor will tell you, the best investments happen when there are fewer risks involved. And it’s no different for property investment. While the housing market is going through something of a boom, there is no telling what will happen tomorrow. There are also other risks to consider. What happens if you don’t find a tenant, for example? Can you afford to cover the mortgage on a buy-to-let, as well as the property you already live in? These are essential questions that you have to be able to answer. Also, it’s a wise idea to have a broad range of investments in your portfolio, not just property. If the housing market crashes, where will it leave your finances if all your money is in property?
Property investment is an excellent way to help your money grow, but there are definite risks. However, as long as you are aware of what might go wrong, there’s every chance of making your investment a success.