There are many big life events that we all hope to achieve one day. Getting our first job, meeting a life partner, and buying a house are in those top three. But investing in property is probably one of the more intimidating life goals to achieve. It’s especially tricky to navigate if you’re looking at property for investment purposes.
There’s a question of where, when and, most importantly – how? Thankfully, there are plenty of options out there when it comes to finding help with a property investment. There is a useful commercial real estate prospecting tool which can give you a well-rounded view of the investment opportunities a property has.
Things to consider when investing in property
There are so many factors to consider when investing in property, it’s difficult to know where to start. But let’s take it from the very beginning to ensure you have a complete view of how to begin your property investment journey.
- What property type are you looking for?
The very first thing to consider is what kind of property you’re looking to invest in. This choice will be defined by a range of factors. The size of your budget, the area you are looking at purchasing in and the kinds of tenants you’re looking to attract. All of these variables will affect each other so thinking about them as a whole is vital.
Your budget will be the main deciding factor in what kinds of property to buy. The type of property will then determine what kind of tenants you will be aiming for. Young professionals need a property with good transport links, for example. Families will be in need of more space and will need to be within the school capture areas.
- Is the property in need of refurbishment?
We all like getting a bargain, but when it comes to housing, less isn’t always more. Although it seems to be beneficial to get a good deal on property, you’ve got to consider the downsides too.
Are you going to do renovations? Properties are more likely to be let if they are in a good condition, so it’s best to fix anything that needs some TLC while you can. But consider that if you are refurbishing, how long will those renovations realistically take?
Cost is also something to take into consideration, especially as the property cannot be let while works are taking place. There could also be further costs you hadn’t accounted for as well as lack of income while the property isn’t being let.
- Rental prices
Once you’ve managed to secure your property and know who it is you’re targeting, it’s time to work out the money side of things. This means working out how much you need in order to cover the mortgage and make it financially viable for you. Next on the list is making sure you’re being realistic about the amount you’re charging based on the current market rates etc.
As soon as the finances are all worked out, it’s time to fill your new property with tenants!
Pros and cons of property investment
There are many pros to investing in a property:
- Provides regular income – if you’re a freelance worker or need an extra financial boost, having an investment property can provide this.
- Tax benefits – interest on an investment property loan is tax deductible.
- Increased value – property values are always subject to change but the chances of your property value increasing are always higher than the chances of the property value decreasing. There are plenty of house price calculators that can help you work out when your property is likely to increase in value.
There are always cons to investing in property, but these are less likely:
- Paying when property is unused – costs will fall to you if the property is not being rented out.
- Tenants can be time consuming – finding and managing tenants can be a long process but this becomes easier as you learn the ways of the market.
Property investment is a great way to increase your financial portfolio. And remember, if you need a helping hand, there are always real estate prospecting tools out there for guidance.
