Property Investing 101

November 10, 2020 3:20 pm

Investing in property is a great way to add extra to your monthly income. Property investment comes with two options: invest to rent or invest to sell.

Choosing Invest to Rent involves purchasing a property and later letting it out to tenants at a monthly price which covers your costs whilst earning a profit.

Property appreciates over time, therefore, in years from now your property will earn you a larger income than the present day. By investing in property now and selling it on in years to come you will gain a profit.

Either way, investing in property is a long-term commitment that takes time to generate results.


Options

If you are looking for a property to earn you a steady income over time then you may be best choosing a buy-to-let property investment. A buy-to-let investment involves purchasing a property and letting it out to tenants. Thus, making it a reasonably straightforward investment option.

If generating a profit quickly is what you are looking for, a ‘flip’ property would prove to be your best option. With a ‘flip’ investment, you purchase a property, renovate it and then sell it on for a higher price.

Meanwhile, there is also the option of buying a property and using it as serviced accommodation. This option typically involves letting out the property on a short-term basis in a hotel-style fashion. These are popular in locations such as towns or city centres as they are usually used by businesses looking to house employees.


Start from the Beginning

Whether this is your first investment or one in a long list there are a range of considerations to be made.

Although investing in property can bring you great returns, it is a costly process and takes time and commitment to get it right

Planning is key. Any good investment requires a plan, because without planning you can’t visualise your direction or end goal. A plan sets out the path for where you’re going.

Consider your budget. You’ll need more than the cash to cover the purchase price. There are other costs to take into account to ensure the process of your property investment runs smoothly. You’ll need to cover costs for legal fees, surveyors, maintenance and have something extra for unexpected costs.

Your budget, investment type goal and objectives will influence which properties you will be attracted to. By researching details such as locations, market conditions etc, you will create a clear idea of potential.

Property investment can be lengthy and daunting, however, by trusting the process you can experience great results. Meanwhile, by partnering with a property sourcing team you can gain the benefits without the stress


Choosing your Investment Type

 

- Buy-to-Let

 
A buy-to-let property investment works well as an investment to earn you an additional income per month. This style of investment brings a range of options and benefits.

Buy-to-let investments have grown in popularity as generations are opting to rent properties rather than own their own home. This brings a demand for availability, building huge market potential for your buy-to-let investment.

This increased demand for rental properties decreases opportunity for your property to lie empty - limiting void periods.

Renting to tenants on a long-term basis provides the security of a predictable income which is a huge positive, particularly in a climate such as today’s.


- Flips



Flip investments are gold mine investments for those who are looking to gain a profit from their investment right away.

Flip properties require full refurbs, bringing the property back to life and increasing its value.

When buying a potential ‘flip’ property you will need the ability to envision its potential.

Meanwhile, you will need an adequate budget to cover all of the costs involved in both buying and selling.

This style of investment can generate huge returns, making it greatly attractive for experienced investors.


- Serviced Accommodation



Serviced accommodation investments are useful when diversifying your portfolio.

These are an investment which bring in an extra income, and with short-term tenancies you can be more flexible with your monthly commitments and timeframes regarding repairs and upgrades.


The 411

Like everything, there are pros and cons to whichever investment style you choose. Each investment comes with its own advantages but unfortunately, they are also paired with risks.

- Buy-to-Let

With a buy-to-let property you only make money when there is a tenant in residence. This is great when you have a long-term tenant, however, should your property become empty, the pressure is on to fill it again.

Buy-to-let investments can prove very profitable as a side income, however, they do require patience. If you have the time and understanding to wait for results then buy-to-let investment is the choice for you.

While letting out a property it is your responsibility as the landlord to keep up-to-date with legislation and regulations. This can be time consuming, however, in the right location with the right tenants, the right investment will be worth it.

- Flips

Flips are an amazing investment if you have the cash and if they work. These investments are more risky, however, the return when a risk pays off makes them worthwhile for many investors.

The risk with a flip is future buyers. You may have finished with an outstanding renovation, however, it may not be the taste of many and could potentially struggle to sell. This is why it is important to do your market research before committing to a flip investment.

- Serviced Accommodation

Serviced accommodations are a good addition to your portfolio, however, you may experience a struggle when trying to find a lender for this style of investment.

With this in mind, when you find a lender, it's crucial that you check the terms and conditions of your mortgage before letting out your property as serviced accommodation. Otherwise you may risk breaching restrictions.


Conclusion

Investing in property is a great move and there are many options out there to suit your budget and portfolio, you just need to plan and do your research.

When choosing your investment property it is vital that you select what suits you best in all regards, otherwise you increase the risk of your investment.

Buy-to-Lets are a brilliant option for both experienced and first time investors. They provide a comfortable return, whilst growing your experience and knowledge.

The right flip property is great for an experienced investor looking to make a quick profit. Experience is a huge recommendation with these properties as a background in property investment can give you better market insights and vision.

Serviced accommodations are fitted to those looking for a side hustle without the full-time commitment of being a landlord. This option provides greater flexibility and restrictions, therefore, taking careful consideration as rules vary surrounding these types.

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