A Quick Guide to Investing in Property for The First Time?

The appeal of investing in property is still going strong. So, even when faced with a fluctuating and uncertain housing market, people are still willing to invest in property. In fact, 5.2 million people in the UK own a second home.

Moreover, buying an investment property provides you with not only an additional income but also is a nest-egg for the future—something you can turn to during emergencies or later in life to pay for care or other support.

But if you’ve worked hard all your life, you want to make sure you use your savings wisely. So, it’s important you buy the right property for you that meets your financial objectives.

So, if you’re thinking of investing in property, but don’t know where to start then check out these top five tips.

#1 Write a business plan

Every new business needs a business plan. This is an opportunity for you to define what your aims are, how you’re going to achieve them, how much it will cost you and what are the timescales.

For instance, are you going to be working full-time or part-time? Is this going to be your main source of income or a supplement? Are you interested in buy-to-let, buy-to-sell or holiday rental? Do you want to buy one property or are you looking to grow a portfolio? What resources will you need? Are you going to employ staff? If yes, how are you going to manage recruitment and pay?

By having a plan, you know what you’re doing and why—which is vital when entering the property market.

#2 Choose the right location

Location is everything but this requires you to balance business priorities with your budget. For instance, if you want to rent to young professionals, then buy somewhere close to the city centre, a business park with access to transport links and desirable amenities. But don’t forget to do your maths. Popular properties cost more so might impact on your rental yield—can you afford to do this? In contrast, if your targeting student or family tenants invest in properties outside of the city or in less popular locations but with good schools, a local university and good transport links.

#3 Do your homework

Don’t buy anything impulsively. Instead, take time to familiarise yourself with the local market. For instance, find out how much properties are selling for, investigate the local area—does it have an established rental market, is it upcoming so better suited for buy-to-sell investment? The better prepared you are means you can make informed decisions, and hopefully reduce your chance of agreeing to a bad deal.

#4 Know your numbers

One of the reasons lots of first-time landlords fail is they haven’t worked out their expenses beforehand—big mistake. To ensure you make money on your buy-to-let aim for a rental yield (this is what’s left after all your outgoings) of at least 4%, otherwise, it’s not worth it.

So, choosing the right mortgage is essential. Most buy-to-let mortgages have a higher arrangement fee than a normal residential mortgages. Also, the deposit required for purchasing a second property is at least 25%.

After doing all your calculations, be honest with yourself and decide if your investment still worth it?

#5 Consider the future

Don’t forget to think ahead—there might come a time in the future when you want or need to sell-up—for whatever reason. The last thing you want is a portfolio of unsellable properties either due to location, condition or damage. So, keep the future always in mind. Sure, a property might look like a good deal now but if it ends up being a chain around your neck in years to come because you can’t sell it, there’s no point buying it in the first place as it will ultimately lose you money.

Need help selling your buy-to-let property?

If you’re struggling to sell your rental property—don’t worry. House Buy Fast has lots of experience in buying rental properties from landlords. They will manage the whole transaction on your behalf quickly and hassle-free. For more information visit housebuyfast.co.uk/services/selling-a-tenanted-property/

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