For most people having a dabble in the property market, they are undertaking a side hustle in an attempt to make some extra cash for a big ticket item, their kid’s college fund or for their own twilight years. If you’re tempted to put some of your hard earned savings into the property market you need to consider whether you want a short term or long term investment and whether you want to be a landlord or simply buy a home to do up and sell on.
For those people who are in it for the long haul, renting out property and creating a small portfolio of properties is the wisest choice. This way, the homes that you purchase will hopefully pay for themselves when rented out, covering any mortgage that you have taken out on them. With any luck, you may even make a little bit of profit each month. Be sure not to fritter this away and to save it for renovations, repairs or maintenance.
Being a landlord isn’t easy. If you are in full-time employment, it would be tricky for you to leave work to go and fix an urgent leak in the roof. Instead, you may need to secure the services of a lettings management company to act as a proxy landlord on your behalf. Take a look at the property investment essentials that every newbie landlord needs to consider.
It’s vital that you buy a property that is in a decent area, and that can outperform the market. You may have heard the term ‘up and coming area’ being bandied about on TV. The truth is that many areas are constantly up and coming because they never quite make it into the desirable bracket. If you want a safe investment, it pays to purchase your humble abodes in well-established areas. This may cost you a little more but you can be certain of a return on your investment and your property’s value increasing every year.
To find a desirable area, you need to look into schools, crime rates and amenities. One location might be cheap with zero crime, but it might also be miles away from anywhere. Don’t just look at the price of a property and go all in if it seems cheap. The chances are that there’s a reason for this whether it’s a structural issue or a clause in the deeds. Take care to read all legal information before putting down a deposit.
There’s nothing more important than vetting your potential tenants. There have been cases where civil law solicitors are called upon to resolve disputes between tenants and their landlord. This is costly and should be avoided where possible. Perform a credit check, an employment check and an affordability check. Make sure they are who they say they are and that they do earn the money they say they earn. Check for CCJs and any marks on their credit rating. Anyone who has defaulted on payments in the past should ring alarm bells and you need to move onto different potential tenants immediately.
You may find that renting your property out to strangers is a little daunting. Remember, this is nothing more than a business arrangement. You shouldn’t be attached to the apartments you have bought and should see them as financial assets rather than homes. Every time a tenancy ends, you can sweep into the property, get it cleaned, carry out any maintenance and get it back on the rental market as fast as possible.
Depending on the property type and location, you might choose to market your pad to young professionals or families. Families love larger and more traditional properties, that are in the suburbs with good schooling. Young professionals, on the other hand, love to be in the thick of it. A city centre location is perfect, with cafe culture adorning the streets and transport links second to none.
Where To Buy
You may choose to look online or venture to real estate agents to locate your rental property. However, many people choose to head to auction. This is where the real bargains can be had. Investment properties often come up at auction because traditional home owner-occupiers don’t want them. You may find that the property you purchase needs some work doing to it, but it might be cheap and in a good area for letting.
Check the legal pack that comes along with the listing and always go and view the property. Don’t take the risk and go by pictures alone. There may be subsidence or heave that isn’t detailed. Once the gavel goes down you have committed to the property purchase and you must complete, usually within fourteen days, by law.
If you do need to upgrade the interior of the property, don’t go all out with granite worktops and designer wallpaper. You are letting your property to people who won’t care as much about your home, and you won’t see a return in the monthly rent you can ask. Instead, go bland. Opt for white or magnolia walls, whip up some local artwork, lay down some oatmeal carpets and ensure the kitchen and bathroom suite is clean and functions well. Anything else is too much of a luxury and is not needed to rent properties out.
If you’re tempted to rent out to students because you can let rooms out separately and achieve a higher rental yield each month, be wary. Students aren’t the tidiest or cleanest and will think nothing of leaving your house in a state come check out time. If you have the stomach for it, by all means, give it a go. However use your common sense and maybe stick to a safer rental, at least initially.
Becoming a landlord is exciting, but it can be daunting. So it right and you can earn a lucrative amount to put back into your savings pot. Follow this guide and make your property investment a success.