Although property investment is a highly lucrative industry, and there are numerous people who have made a fortune with real estate, like everything else – it comes with risks. Regardless of the type of property you’re investing in, you have to do your homework and ensure everything will go smoothly before starting your journey as an investor. To reach success and save yourself from losses, make it your mission to do as much as you can to educate yourself on the property market. This is especially true for investors looking towards the UK property sector, as it can offer high rates of return if you’re able to pinpoint the best spots for investment.
Property investment isn’t for everyone, and although it’s an excellent opportunity, you’ve got to be sure it’s what you want before jumping into a purchase. To get you started, we’ve put together a list of some essential things to consider before becoming a property investor!
Do your research
As with any business venture, research should always be at the focal point of your mind, especially when you’re getting started. Considering investing your life savings – or even just a large chunk of money – into any investment is scary and you need to be sure you know everything possible before spending your money. If you’re unsure, speak to a property expert about your concerns and queries, as they should be happy to help you out. The likes of RWinvest have investment consultants on hand to answer phones and emails to any potential or current investor about their worries or even their celebrations (when things go well!).
Calculate expenses and profits before
There is no harm in being prepared, for anything! When it comes to property investment, there will be expenses to consider and how this will then balance out against profits. It simply isn’t worth losing money on a property, and if you do the expenses/profits calculation before investing, then you will ultimately know what to expect. Start by calculating the money you have and how much you may have to borrow to afford the investment, if you’re lucky enough to have enough capital to outright by the property then this step doesn’t apply. Next, calculate how much it costs for your ideal property and compare this to the amount you have (or have borrowed). Be sure to find out the rental return on the property if you’re opting for a buy to let opportunity. Also, it’s critical to consider the costs of a property management company if you do not want to have a hands-on investment experience.
Select an affordable property
Throughout the UK, there are hundreds of investment properties to choose from, and it’s about finding one that is affordable for you and will give you profit and rental income. You may be looking at a house that can be rented out to a young family, or maybe you’re wanting a studio apartment to be lived in by a university student – whatever it is that your ideal investment is – it’s great to consider your target tenant audience before choosing and settling on a property.
Consider location as it is key
If you’re choosing a buy to let property, you will want to consider the location where the development sits. According to The Big Investment blog, cities such as Liverpool and Glasgow have a higher rental yield than London and Devon, which ultimately means you’ll make more money in both the long and short term if you have a property within these cities over other ones. The location in relation to its city centre or suburbs is key to consider too. If you’re wanting a family as tenants, then it may be best to look at properties in the suburbs. However, young professionals typically like to be in the city centre, since it’s close to amenities and their work. Students prefer a location that is within ideal walking distance to a university campus. If you’re able to find a property that is close to a university, then you’re sure to find tenants willing to pay above the odds, just to be able to roll out of bed and into their lectures and seminars!