Buy to rent has really become an invaluable asset for the last 20 years or so. Many individuals are turning their hand to this form of investment so that they can get a major source of income. Right now, market confidence is high and the property market is certainly looking bright too. If you are thinking about making a property investment then believe it or not, now is certainly the right time. If you are a first-time investor then it helps to know where to start so that you can make yourself aware of the decisions you are going to have to make when buying a property so that you can come out on top overall.
When You’re Just Starting Out
Before you do anything, you have to make sure that you do all of the right research. If you are a first-time investor, then you need to make sure that you think about which property is right for you and even what you can achieve from it. It doesn’t matter whether it’s capital growth, rental income, or even a mixture of both. At the end of the day, there are many different types of property out there for you to buy and it helps to consider things like renovation and even what type of tenant you are hoping to achieve. By doing this, you can then begin to get the best result out of your investment and the goals that you set for yourself overall. If you want to make a smaller property investment, why not look into bungalows for sale?
Location Is Everything
The location that you choose will make all the difference between a successful investment and an unsuccessful one. Some investors choose to actively limit their property search to areas where they live so that they can have some peace of mind. It may be wise to consider some of the other areas if you want to maximize the returns you are going to get. Do your research and find out how you can capitalize on the highest amount of profit depending on the city you choose to invest in. If you do this well, then there’s no reason at all why you shouldn’t be able to come out on top.
Think With Your Head
You have to know that purchasing a buy to let property is very different from buying a home for yourself. If you are looking to try and attract young professionals or even students as your tenants, then you need to try and think about all of the amenities that are likely to appeal to your market. Bars, shops, schools, restaurants, or anything else of the sort can easily increase your rental yield by a huge amount. While these factors might not be something that you personally look for when buying a home, you may find that it is in fact a deal-breaker for any potential tenants.
Keep It Simple
There is absolutely no doubt that buy to let can be profitable, to say the least. A lot of landlords will use the properties that they have as their sole source of income. Increasing your portfolio will give you the chance to maximize the returns that you have but at the same time, you have to make sure that you have a good outlook when it comes to your finances. You have to make sure that you make a budget and that you plan how much you can afford or borrow. It doesn’t matter whether you are a cash buyer or whether you have a buy to let mortgage because there will be various tax implications that you need to keep in mind.
Hands-On VS Hands-Off
Ultimately, it is very crucial for you to decide what kind of property landlord you would like to be. If you want to remain more hands-on then you will need to try and find tenants, conduct any viewings, and also maintain the property as well. If you are a hands-on landlord then you will be able to save some money by simply opting for a DIY approach. This will give you some extra responsibility, however, and you may not be able to manage all of this. If you are time-limited or if you have a lot of properties, then you may want to think about adopting a more hands-off approach instead. If you are willing to pay a small fee, then there are tons of letting agents out there that will manage your property and you won’t have to get involved at all with the day to day dealings of having a tenant. This includes any ongoing maintenance, viewings, paperwork, and more. So many landlords prefer to go down this route because it gives them way more time to focus on some of the other ventures. It also helps to try and start out slow so that you can build gradually as well, so keep this in mind if you can.
Create A Timeframe
Knowing what you want will really help you to create a nice and coordinated time frame for your achievement. If your objective is to try and make a return in a very short space of time, then it may be wise for you to flip properties instead. This may sound like the best way forward but at the end of the day, it does put you at a very high level of risk. If you want a high return over a much longer period, then buy to let may be a much more suitable option. Yields of around 12% can easily be expected, but of course, you do have to think about things such as vacancy rates and even maintenance costs as well.
Try and make sure that you don’t use more than 50% of your mortgage when financing a property. This may be difficult when you are first starting out but as you explore the idea of property investment, even more, you will soon find that you can make it more feasible. Even though there is a lot of surface attraction with mortgaging, you have to remember that it is in fact a bad idea. The longer you carry on this way, the more pain and stress it will cause you at a later date.
Avoid Shared Mortgages
Even though a shared mortgage can give you the chance to take out an even bigger mortgage, they do require one person to be the main borrower. The other person will then borrow less. The person who has the highest income will usually be the core borrower. If you have a lower credit rating, then you may find that your interest rates are much higher as well and this is the last thing that you need. Shared mortgages tend to allow for one property owner as well so arranging all of this can be a stressful and daunting process.
Review Your Plan
It’s also very helpful for you to constantly review your plan. Keep some clear notes of your process and also make sure that you plan at least 6 months in advance as well. You have to remember that no two six-month periods are the same, so you have to make sure that you are able to adjust your investment according to property prices rising and falling. If you can do this, then you will soon find that it is easier than ever for you to reap the benefits.
If you do not have enough confidence in the world of domestic property, then why not try and use foreign currencies to your advantage? At the end of the day, there are so many markets out there that don’t require as much investment, but that can easily give you a much higher yield. You have to make sure that you don’t just look at the value or even the potential of the property. Instead, think about the economy, the stability, and the political state of the company too. If you know that there is a tourist hot spot then this could indicate that the market is lucrative. Overseas hotspots include Berlin, Sofia, Sao Paulo, and even Istanbul too.
Have A Clear Exit Strategy
You have to know that timing is everything when it comes to investments. Knowing when you need to exit is half of the job. You have to make sure that you keep an eye on the market and you also need to know when to pull out of a certain investment too. If you have a valuable workplace exit strategy, then this will save you a lot of time and effort when the time comes for you to liquidate. Remember that the property market gives you way more data now when compared to just a few years ago. Keep track of it and take your time but never make any knee-jerk reactions. If you do, then you will soon find that you are able to make better decisions and that you can also stabilize your investment too.
This is a collaborative post.