2 Different Ways To Invest In Property
Investing in property is not a quick win or an easy side hustle. But property can be very lucrative if done well. It is a tried and tested way to improve your income and it can be a sound investment prospect. In this post we’ll be sharing with you 2 different ways to invest in property.
Before investing, is this right for you?
Are you ready to invest in property? Property investments are long term ventures so you need to be prepared to be in it for the long haul. Whether you are looking to keep the property for many years or plan to sell it on, you cannot accurately predict the market so you need to be ready to bide your time on a sale.
Buying to renovate and sell on
You might choose to buy a property that it is in need of refurbishment.
When you are choosing a potential property to improve, ensure that you carry out your research on the area. There might be work planned that could devalue your chosen property. It’s worth looking at the local school catchment area too. Both of these examples could significantly affect the value of your property and if you fail to consider external factors like this and just focus on the renovations you are planning you could lose money if the market drops by ten to twenty percent.
You need to be confident that the work that you have planned will add to the value of the property sufficiently to make your money back and the profit needs to cover your time and expenses. You also need to be mindful of the ceiling price of the area and the road that you are buying in.
This is probably the most risky of your options as you need to accurately predict the costs of the project. Consider the amount of time that it will take to carry the work out too. You then need the property market to be buoyant at the time that you are ready to sell the house on. There are several factors that can affect your house sale and profit. But buying to renovate can be the fastest way to free up your funds again.
Buying with a view to renting out
This is probably the most common way to invest in property. The reason that it remains so popular is that it comes with less risk than any other methods and is generally easier to predict your level of return.
You can apply for buy to let lending, and then purchase a property in your chosen area with a view to renting it out to tenants. Bare in mind that you will need to fulfil your responsibilities as a landlord in this case. You might also choose to let the property on a short term basis, by using it as a holiday let. Again, there are specialist mortgages for this so do look into holiday let mortgages.
There are several options available to you when you buy to let. You could buy a home that is already tenanted which gives you confidence that you will be able to rent it out and you could continue with the current occupancy and arrangements, this would also enable you to predict your income as there will already be rental income in place. You could buy a home that is ready to move into and you need to then find tenants. It is recommended that you use a management agency to do this and arrange it for you. You could also purchase a house that is in need of some renovations and carry out this work ready for tenants. This could add value to your investment up front, though you will want to complete the work quickly in order to start earning your rental income.
If you are planning to use the property as holiday lets, location and amenities will be key to you, so carry out some research and take a look at the rental income of similar properties in the area you are planning to buy in. This option gives you more flexibility and the option to use the home for yourself as well as alter the rates more regularly,. However it can be less predictable around your income as you rely on new bookings weekly.
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In both cases, you are playing a long game and you should also see returns on your investment as the property value increases over time.