A stable hard asset such as property is usually a good long term investment in volatile markets and should be part of most portfolios. Here are some things to be mindful of:
Educate Yourself
The proposition is simple enough – buy property, then rent it out. However, as with anything, there are layers of complexity under the surface, and understanding them is key to becoming a successful investor.
There is no strategy that fits everyone, so knowing your own personal objectives will help you to understand the market and invest as securely as possible.
Do Your Research
The number one way to lose money when investing in buy to let property is not doing your homework. Information on location, the property market, taxation, legalities, mortgages, property management and much more is all readily available.
Know Your Short And Long Term Strategy
One of the biggest upsides of investing in property is that it comes with two separate income streams: capital appreciation and rental income. The former represents your profit over the initial purchase price if the market rise, and can yield both short- and long-term profits. If you buy off-plan, at a below market rate direct from the developer, your capital appreciation can be magnified.
Rental income, or “yield”, is a monthly income and will accumulate naturally over time. This is a more long-term prospect and can be maximised by purchasing in an area where rents are forecast to go up due to growing populations.
These two income streams allow you to plan a dual strategy where you can profit in the short- and long-term depending on your objectives. By purchasing in the best property markets, you can get the best of both worlds.
Location Location Location
Finding the right location for your investment is arguably the most important tip of all as it can make or break your portfolio. Put simply, you should find the places people are moving to and invest there.
You can work this out through researching population growth data, looking at where big multinational companies are opening new offices, finding out which cities are planning or undergoing significant regeneration, and where the major infrastructure investments like HS2 high speed rail will lead.
Once you have looked at these, identify which cities meet the above criteria and also have a shortfall of available properties to maximise your chances of making a strong, profitable investment.
Use A Property Management Firm
Finding a good tenant and managing a property is a lot of work and is not something that can be carried out via shortcuts. It is a time consuming job with many different elements.
For a small monthly percentage of the rental income, you can have all the benefits of being a landlord with none of the hassle.
Be Financially Organised
Property investment is a business, and you should view it as such when putting your money in and growing a portfolio. Like any business, being organised is a key factor in success, especially in financial areas.
You should make sure you know where your money is going, what your monthly rental income is, where the outgoings are with property management and other expenses, and what your projections for future income are.
To ensure you are on the right track when considering property investing, talk to one of our FCA authorised wealth managers by arranging a Discovery Call [Here]
This article is for informational purpose only. It does not constitute finacial, tax or legal advice, nor is it a recommendation to buy, sell or hold any investment. Past performance is not a guide to the future, investments rise and fall so investors could make a loss. No view is given on the present, future value or price of any investment and investors should form their own view on any proposed investment.