When it comes to investing in property, there’s a lot of advice out there that it can be difficult to pick between good and bad advice. What investment advice is looking after your interests and which one is after the interest of the one offering it to you? Well, in this read, we are going to provide a few basic but helpful tips and guidelines that you can follow. Combine these with the proactive observance of the market, and you will have better chances of making the right decisions in the real estate market.
Do Your Homework First
The real estate market can be pretty overwhelming, especially for beginners. There’s so much to learn that sometimes it feels like there’s no point in learning anything. The easiest option seems to be just jumping in, making an investment and see how it goes’. Many individuals look at several properties in an area and simply purchase one because it seems like a good house.
However, this isn’t a smart move if you are looking to benefit from your investment in the long run. What’s more strategic is to learn all you can regarding property investing before jumping in. Know how to research an area, how to identify good houses, how to inspect a property and the various investment strategies.
Keep a Clear Focus
It’s vital to determine what you want from your investment:
-Is it assets for your business like owning your own office?
-Is it a second home that generates revenue when you’re away?
-Is it for capital gain? For instance, flipping or a long-term goal?
-Are you looking to get a consistent second income, i.e. renting?
Create a Timeframe
Knowing what you want will naturally lead you to a coordinated time frame for what you want to achieve. You may also find that the time frame defines the kind of investment to pursue. For instance, if your goal is to make a return in a short period, flipping could be the way to go, even though it comes with high risk and associated costs. If you want a higher return over a long period of time, buying to let could be an ideal option. You can expect yields of around 7% to 12%, although variables like period of vacancy, interest rates, and ongoing maintenance costs may impact this.
If becoming the sole owner of a property is too risky for you at the moment, you may want to consider investing in a Real Estate Investment Trust (REIT) or Fund. These products are usually well structured and give you more liquidity as a holder.
When purchasing property, you do not want to use more than 50%. Although it can be tough at the beginning, it will become feasible down the line. Re-mortgaging is another thing you want to avoid, despite the surface appeal. If you need to use it, shorten the loan duration. The longer it is, the harder it is going to make your life.
This is not a comprehensive guide for what to do and what to avoid, but it covers the important basics when stepping foot into property investing in the UK.