Your Ultimate Property Investment Guide
If you’re looking to invest, they say that two things to invest in for a guaranteed impressive ROI (Return on Investment) are gold and property.
Now, they, whoever ‘they’ are, obviously know what they’re talking about, especially when it comes to property. Here in the UK, the property market is growing quicker than a lot of experts predicted, and if you’ve the funds, investing in property is certainly worth it, providing you know what you’re doing.
In an ideal world, you’d find a property, purchase it, give it a quick coat of paint and have it back on the market for considerably more than you paid for it in a matter of weeks. Sadly, things aren’t quite that easy and if you are serious about investing in property, you need to know what you’re doing.
That’s where we come into the picture. Contained below, we’ll be looking at several tried and tested tips for investing in property, and a whole lot more besides.
Why invest in property?
If you’ve the finances available, why not make your money work for you? It’s pretty well established now that interest rates on personal savings accounts are shockingly low, and if you’ve the finances sitting around doing nothing in the bank, why not invest instead?
Now, if you’re looking to invest, you’ve plenty of options as you can invest in all manner of things from stocks and shares ISAs to art and fine wine. For most, if you’re looking for a smart investment option, why not invest in property?
No doubt you’re all familiar with Monopoly, and while this board game can indeed destroy families (not literally, unless you’re really competitive) it does teach you how lucrative the property investment industry can be.
We all know that the big money in Monopoly is in property, but the great thing about investing in property in real life is the fact that, unlike Monopoly where house prices and property prices don’t change, in the real world they do, and they tend only to go one way – up.
Whether you’re buying a property, or renting, you are almost guaranteed to enjoy a considerably impressive ROI, unless you’ve paid well over the odds or done something very wrong. To give an example, in the UK, over the last five years, rents have increased by close to 14% and now, the average house price here has shot up from £192,000 to a whopping £256,000.
Basically, whether you’re looking to benefit from rental incomes or capital growth in the form of a lump sum payment, property is where it’s at.
What about the downsides?
So far it’s looking fine and dandy for a property investor, because basically, what we’ve said so far is that, if you invest your finances in a property, you’re virtually guaranteed to make considerably more money than you invested. Like most things in life, however, not everything is that black and white, and there are unfortunately downsides to consider, including:
Ah, the dreaded taxman, the property investor’s mortal enemy. Over the years, tax laws in the UK have changed which can work against property investors and landlords. For example, you can no long claim back quite as many expenses as a landlord, plus you’ll also pay more stamp duty. Furthermore, capital gains tax has also gone up, though there are workarounds.
Property is not a quick fix
If you’re looking to make money quickly, property may not be the investment for you. The technical term is ‘illiquid’ which basically means that you will struggle to make your money quickly. Property should be considered a long-term investment, but if you have got the patience, your investment will pay dividends.
Right now, in late 2020, we’re living in very strange and uncertain times, and one thing that the markets do not like is uncertainty. With political uncertainty and unrest, trade deals, and global pandemics, property prices may stall from time to time or even come down. Generally speaking, though, these dips never last long. This is another reason why property should be a long-term investment.
It is hard work
Like we said earlier, in an ideal world you’d see a property you could afford, give it a quick spruce up, and have it back on the market and near double your money in a matter of weeks. We don’t live in an ideal world, though, and property investment can be tough. First off there’s the manual labour involved to modernise a property and refurbish it, then there are the legal issues, plus if you’re renting, there’s the stress of finding good tenants and actually having them pay.
4 handy property investment tips
Finally, we’ll leave you with a series of tips designed to help you invest in property. These include:
Decide on your investment strategy
The first thing you need to do when investing in property is to decide on your investment strategy. As mentioned, you can either rent the property out and adopt a buy-to-let strategy, or you can sell it outright with a buy-to-sell strategy.
Set plenty of funds aside
If you’re looking to increase your ROI, once you find a property you will likely need to put money into it to do it up and increase its appeal.
Typically, a new kitchen, a new bathroom, new flooring, and a coat of paint on the walls will be required to really boost your property’s appeal, though some may need more or less work doing than others.
You also need to consider things such as the windows, the boiler, the plumbing, and the electrics. If there are any issues with these, before your property is ready for market these issues will need rectifying.
Explore the different investment options
Another thing to consider when investing in property is the various investment options available to you.
If you decide you want to rent the property, you can go with things such as:
- Standard buy-to-let
- HMO (House of Multiple Occupancy)
- Holiday let
Each of these has its own unique list of pros and cons, so again, do your research.
Finally, they say that patience is a virtue, and if you’re serious about property investment, you will need to be patient.
Not only will there be work to do, you’ll also have to advertise and market the property, get it valued, find tenants (if renting), and deal with solicitors, estate agents, councils (in some instances such as HMOs), and various other authority figures.
If you want a quick fix, property is not for you but if you can be a little patient, the rewards are well worth the patience.