Buying property investment on your own? Here's what you need to know!
You can actually invest in property such as buy to let and benefit from both rental income and increased equity as the piece of real estate increases in value. Interest rates are quite low and the potential of property increasing in value is so high today that buying a house might turn out to be a very rewarding exercise. Even so, before you put in your money there’re a number of things you need to know.
Take time to understand the market fully
Investment experts recommend that no matter how lucrative and potentially rewarding a property is you take time to understand it. You must understand the benefits fully and the potential risks there in. For instance, if you’re interested in buy-to-let, ensure it’s absolutely what you want and that your investment isn’t better elsewhere.
Buying a house might involve committing lots of money to a piece of property and seeking a mortgage. In future, increase in house prices will see you making huge gains from the mortgage debt while a fall in prices will see your deposit severely hit without a change in the mortgage. Investing in property has worked for many. To understand what awaits you, take some time to talk to a friend or acquaintance who’ve invested in property before.
Location is key
Investing in a property mean you must mind the location. For buy-to-lets, it must be a very attractive and safe place to live in for all types of potential tenants and property buyers, not necessarily yourself. If the area is crime ridden and lacking in critical amenities it won’t draw anyone’s interest. Essentially, you must ask yourself why anyone would love to live in the area and in that property. Perhaps it’s ease in accessing public transport or proximity to good schools. Be fully convinced about the factors that make the property a prime investment.
Understand the maths involved
Prior to committing yourself to search for a house to buy take time to understand the prices of houses you’ve in mind and rent involved if you decide to let. For instance, most investors in buy to let seek a rent covering 125% of their mortgage repayments to about 150% and would require 25% in deposits or more. Once you’re clear about the possible rent and potential mortgage rate decide whether the investment is worth it, factoring in maintenance work involved.
Don’t forget insurance
After purchasing a property with lots of expensive and appealing features most people just want to have it insured. Even so, most insurers will only cover damages for houses that haven’t been occupied for about a month. If you can’t practically occupy the new property you could go for unoccupied home cover available for three to nine months.
Hands on or hands off?
Do make up your mind whether an agent is better off managing the property for you or if you’ve the time to do it yourself. Note that management fee will be required if you decide to use an agency but you won’t have to deal with emerging problems such as searching for plumbers, painters or electricians. If you did it yourself, you’ll need time for repairs, promoting the property, availing yourself for viewing among others. Make up your mind how hands on you want to be.