If you want to buy an investment property but aren’t quite sure where to start, then this is understandable. So many people want to make the leap into property, but when the time comes for them to take that next step, they just have no idea where to begin. They also worry about making the wrong decision, to the point where they don’t end up investing at all. This is the last thing you want to happen, but luckily, there are ways for you to turn things around.
Invest in Property when it Makes Sense
Before you go ahead and make any decisions regarding your property, it is so important that you review your short-term situation as well as your long-term goals. You need to think about whether or not you have any debt, or large expenses coming up. You also need to think about whether or not you need some savings to one side for a rainy day. Be sure to give some thought to ongoing payments and make sure that the property you are investing in, is the right one for you. When you have weighed up all of your finances, you then need to calculate the cost and how much your investment could yield. This is the best way for you to ensure a positive result out of your investment.
Know Taxes and Fees
If you want to be a property investor, then you have to be aware of the costs you need to pay out for. The purchase price of the property is not the only thing that you have to pay. You may need to pay income tax if you are investing in a rental property, as well as insurance and maintenance. You can deduct this from your total income when the time comes for you to calculate the tax amount. You also need to keep accurate records of the transactions made in relation to the property. Capital gains tax may also need to be paid, so be mindful of that.
Know the Buy-to-Let Requirements
You have to be aware of any legal responsibilities that could come with your next property. As a landlord, you will have to make sure that the property is free from any health hazards and that any gas or electrical equipment is installed, maintained and checked daily. It’s important to know that fire safety measures also apply. This means you will have to fit a fire and smoke alarm, as well as a carbon monoxide alarm. Following stringent safety regulations is also so important, so make sure that you keep that in mind.
Focus on your Investment
When the time comes for you to buy any kind of investment property, you need to focus on the ROI of your property. Ideally, you should be aiming for a very robust rental yield. Be sure to assess the rental yield of the property where you can, because a strong rental yield means that the property can more than pay for itself. It’s important to consider the market for tenants as well. Make sure that you find anyone who could be interested in the property as this is the best way for you to avoid a vacant period with the property. A good rental yield would be anything above 5%. If you can hit a number higher than this, then that’s even better.
Capital Appreciation
In addition to your rental income, you also need to give some thought to capital appreciation. This is yet another way for you to gain a return on your investment. As the value of your home grows, this gives you the chance to take advantage of capital gains when the time comes for you to sell. Look for a property for sale in an area where the value is likely to increase. Capital appreciation tends to be highest in cities that are undergoing some kind of regeneration. This tends to create an influx of people, along with more tenants. You also have the rise of property prices too. That being said, you should look out for areas that have a very strong economy or job market. If you can do this, then you will be able to target long-term tenants. Make sure you look out for any potential red flags with the property as well. This could be asbestos or even a bad roof. Things like this tend to really put buyers off, so you need to be mindful of that if possible. One way for you to make sure that you are making a good investment would be for you to look into an asbesetos testing service.
Target the Right Demographic
Keep in mind the fact that the rental demographic that you target as a landlord is going to impact the yields that you are able to generate. A top tip would be for you to consider that some demographics will generate more income when compared to others. Students will pay more for a property when compared to other tenants, and if you rent a good property in a good location then you can expect to get 20% higher income when compared to renting to a single family. International students will pay even more, especially if accommodation is in short supply. As an investor, you may want to think about purchasing a holiday let. If you have a property in a popular area, then you can rent it out on a short-term basis so you can gather weekly or monthly rent.
Investors
Investors may want to consider purchasing a property as a holiday let. The main reason for this is because if a holiday is in a very popular area, then you can easily rent it out on a short-term basis. You do need to keep in mind the fact that the property might be vacant between the peak seasons though, so make sure that you keep this in mind, as you may not make any money during this time. This means you may have to seek an alternative source of passive income.
*contributed post*
Post a Comment