Lots of people will say that when you have money to invest, property is the way to go. After all, a property is a solid thing that will always have a value and won’t vanish like stocks can if things go bad. But how do you know if property investment is right for you? And what are the tips to starting up as a landlord?
Is property investment right for you?
There are lots of ways to invest money and property investment doesn’t suit every tastes. It is a great option if you are willing to tie up your money for a long period of time and if you prefer the solid, tangible benefits of property versus the somewhat vague and insubstantial nature of stocks or shares.
You should also start out aware that you may not make a profit on the property, depending on the price you pay and the situation of the market. Plus, there are always additional risks if you borrow money to buy the property including rising mortgage rates and decreasing house prices.
Finally, there are the costs involved with running the property that are an integral part of becoming a landlord. These include basics such as the cost of the mortgage, the upkeep of the property and money needed for those unexpected repairs. Then you will need to file tax returns and ensure you are paying the right tax on the money you make.
Starting out as a landlord
If this all sounds like the kind of thing that works for you, then starting out as a landlord could be prefect. The next step is to consider the property itself – what type of property, where should it be located, how are you going to manage it?
Many lettings agents offer services to get tenants into the property and can advise you about the potential rent you can charge for a particular area. They can help with legal matters such as the tenancy agreement and background checks as well.
You should also research to see what types of property are on offer if there is a specific area you want to buy within and how quickly these properties are occupied. For example, flats or houses let to students will go quickly in areas with big universities but could be unoccupied for part of the year if the students go home.
You may need to spend money on the property before you can start making money on it. A house with a shabby bathroom and kitchen, poor storage or a messy garden will not attract top rental income, so you may need to renovate before you start. But if this makes the profit increase over the course of time, then it could be worth it.
Get tax advice about everything you are doing to ensure that you don’t get yourself into trouble and keep accurate and complete accounts. Avoid accounting mistakes and even consider employing a professional accountant to ensure everything is done correctly, as many landlords get trouble from HMRC rather than a tenant!