Dipping your toe into the exciting waters of property investment? If it’s your first time buying property as an investment, you’ve come to the right place. There’s a lot that savvy property investors needs to know, but it’s always best to start with the basics.
1. Mortgage shop.
This seems rather clear cut, but far too many property investors simply go to a bank they’ve used in the past and accept that buy to let mortgage without question. Also, be aware that buy to let mortgages are different to a mortgage for a home you intend to personally occupy, which in turn are often different than a mortgage for a property you are buying to sell. There are several different types of mortgage you might be able to use, and there are always different financial institutions that offer BTL or investment mortgage deals that are more favourable than the typical schemes. It’s a very good idea to work with an independent broker to find the right mortgage for you.
2. Know your budget.
Know what your budget is and know what sort of rental yield you need to get out of a property that fits your budget, before you even think about looking at properties. You’ll have to present this information to your lender in any case, so it’s a good idea to sit down and work it out now.
3. Be sure property investment is right for you.
While property investment is typically a very solid way to improve your cash flow, it’s definitely not for everyone. You’ll need to have funds not only for the purchase of a property, but also for any doing up it requires prior to being let. Buying to let or even flipping houses is not a way to simply print money. It requires a great deal more work on your part than investing in a mutual fund, for example.
Research the experiences of real property investors, and not simply via their own promotional materials.
4. Choose the neighbourhood you’re interested in.
Keep in mind that the cheapest properties aren’t necessarily best—and nor are the most expensive. Remember that budget? The right area will be one which has properties within your budget, which can be let for the return you need, and which have plenty of potential tenants looking to rent or prospective buyers. Houses of multiple occupation (HMOs) for example, are popular in areas with plenty of students. Small homes might be ideal for older couples; larger homes for families. In any case, choose the location carefully, keeping all of these factors in mind.
There’s so much to learn that even experienced property investors don’t know everything, but it’s critical that new investors understand these basics before setting out. There’s always more to learn, but that’s a good thing when you’re passionate about your investments; plus, there are always knowledgeable resources that you can use to your advantage.
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