Ever thought about securing a property investment? Many of the world’s wealthiest people boast about their property portfolio, so it must make for a promising investment, right? Property investment specialists agree although they encourage potential investors to carry out the necessary due diligence before investing. We’ve put together some of the things you need to know about if you are considering purchasing a property investment.
Are you ready to become a landlord?
Property investments are worth considering if you want to generate a continuous passive income. Traditionally, buy to let investment properties are favoured among first-time investors, which are let out to tenants in order to make money. Experts such as RWinvest, suggest purchasing a residential or student investment property, – usually, an apartment in a popular city-centre location will give you the best returns on your investment.
If you’re looking to earn money through rental income, you will need to consider whether or not you’re comfortable being a landlord. Do you also know your way around a toolbox? Property investors who can complete repairs and renovate properties themselves can save a fortune on expenses. However, you can employ a property manager and have people carry out any work for you if need be.
If building a property portfolio will be your full-time job, you may not need to hire a property management company as you will have time to manage the properties yourself. However, suppose you’re going to secure a property investment alongside your current source of income. In that case, you will more than likely need some help when it comes to finding tenants, completing documentation and covering any maintenance issues.
Choosing the location
When it comes to choosing where to secure your property investment, you want to select the right location. Your investment should be an asset, not a liability, so you’ll want to choose an area that is popular with plans to grow from future regeneration projects that will add value to the location, or a city that houses some of the top universities.
If you were to choose an area where people don’t necessarily want to live, it’s unlikely the rental demand will be there, and your investment could end up costing you money due to void periods where the property is left untenanted.
Depending on the type of tenant you’re targeting you may want to consider things like local parks, shopping districts, restaurants and nightlife, as well as reputable schools. Choosing the right amenities, in highly sought after areas will make for consistent rental income and a great return on your investment. Looking for property developments in the city centre is an excellent place to start. With access to public transport and a flourishing job market, these properties will attract many potential tenants.
Look for locations with the highest yields, as you’ll want to receive the best rental returns on your investment. If you’re serious about making money from your investment, you’ll want to do your research around what a good rental yield is, and how to calculate the percentage correctly. For some of the best yields in the UK, experts suggest the north of England as the best place to invest, with rental yields of up to 10%. Regardless of which part of the UK you want to invest in, whether it be England or Northern Ireland, you’ll need to figure out which cities are the property investment hotspots.
Before getting tied up into a long term property investment, you need to figure out the finances. As well as the initial downpayment and cost of the property, you’ll also need to factor in additional costs like repairs and taxes. There are multiple taxes regarding property investment which you are liable to pay if investing within the UK.
The taxes you’ll need to consider include, stamp duty land tax, which is paid on buy to let investments over the value of £40,000. The tax percentage then varies on property’s priced higher than this and can be anywhere from 3% up to 8% depending on the value. If you’re thinking about investing before the end of March, you can take advantage of the stamp duty holiday and save a considerable amount on your property investment. You also have a tax on the rental income you earn, and capital gains tax that is payable on any profit you make when you sell the property.
For more information on calculating taxes, you can check out online guides by property experts, or contact a property investment company to decide if a buy to let property investment is the right thing for you.