Property Investment
Getting Started With Property Investment | A Laymans Guide
Property investment can be a daunting prospect if you have never done it before, but there's an easy way to get started and that's to buy your own home. The first investment that most people make is the house they live in. They buy it for a certain sum and hope that it will increase in value by the time they are ready to sell it. During their occupancy they may even do things to increase the value of their home. If you have done any of these, then you already have some of the skills you need to make a sound investment. However, if you are planning to take up property investment as a business there are other areas you need to consider.
A key aspect of any property investment is location, and this applies whether you are thinking about your own home or a property you are planning to let out. The budding property investor would be well advised to consult an expert before making that first investment. Local letting agents will have an in depth knowledge of the region and will be able to advise on whether a particular property will make a good investment. This is not just about location, but about the types of people who are likely to rent the property and the amount of rental income you are likely to get.
Refurbishment and Renovation
It is also important to consider refurbishment and renovation when deciding on a suitable property investment. While it is true that some properties may be hidden gems that need much less work than their appearance suggests, other properties may be lemons, which means you could be pouring money down the drain. It is best to get a true assessment of the essential work that needs to be done on a property to make it fit to live in. There are two aspects to consider with this. Some of the work will be needed so that landlords comply with their legal responsibilities in regard to electricity and fire safety, to give just two examples. Other work might be needed to ensure that your new property is in line with others in the area, making it easier for you to rent out.
Working out the rental income can be a minefield for someone who is new to property investment. Looking at other properties in the area and seeking professional advice will certainly help. Knowing how much rent you can expect will help to determine whether an investment is suitable, as you will need to be sure that maintenance and tax costs are covered. Typically, people who are issuing property investment loans will expect a rental cover of 130 per cent.
Once you've done your homework, it's time to get a mortgage for your new investment. You will need to be able to provide a deposit of around 20 per cent (though it may be less). If it is your first property investment, mortgage lenders will usually expect you to have some means of servicing the mortgage, such as a job. Once the ink is dry on the paperwork, you will have taken your first steps into property investment.
