If you’re keen to start investing in property, there are lots of stages you’ll need to go through and many, many considerations you’ll need to make along the way…
1. Decide which strategy you’re going to follow
How you invest in property will depend on the amount of capital you have to invest, whether your strategy is long or short-term and how much effort you want to put in. If you’re keen to generate an income from property, have a moderate amount of capital to invest and have a long-term view of your investment, a buy-to-let property may be the best option. But if you have a good amount of capital to invest, you might want to consider property development. Many mortgage lenders won’t allow you to borrow money to buy a property that’s not ‘habitable’, plus you’ll need cash to pay for renovations if you purchase a property to develop. Finally, if you’re keen to remain more ‘passive’ with your investment, you could consider a REIT or ‘flipping’. All property investment strategies come with risks, so consider your options carefully and always seek expert advice.
2. Do your research
Much of your success as a property investor will be determined by investing in the right property at the right price. You’ll need to consider your target market for renters or buyers and then look at suitable locations. For example, if you’re looking to target young professional renters with an apartment, is it close enough to a train station or major road for their commute? If you’re looking to develop and sell to a family, what are the schools like nearby?
3. Research mortgages
Getting a good mortgage deal can have a big impact on your profits. If you’re going down the buy-to-let route, your mortgage payments will eat into your rental profits. And if you’re looking to buy a run-down property to develop, you may not be able to get a mortgage at all and may have to consider alternative finance or spending more of your own capital. Always speak to an independent broker or financial advisor to discuss your funding options before investing in any property.
4. Make the right offer
Whether you’re purchasing a buy-to-let, or a property to develop, or an off-plan new-build to ‘flip’, what you pay will be key to your success. But for investors, it’s even more important as it has a direct impact on their short and long-term profits.
5. Choose the right solicitor or conveyancer
This is where more research is needed. As an investor, it can pay to seek out a solicitor with experience of completing investment purchases. For example, if you’re looking to buy a House in Multiple Occupation (HMO), where you let the property on a room-by-room basis, having a conveyancer who specialises in shared living properties can help keep your purchase on track. And remember: the faster you can complete your purchase, the greater the boost to your profits.
6. Have a survey
When buying a property to develop, it’s common to find nasty surprises that eat into your budget and reduce your profits. If you’re looking to buy a property that needs work to bring it up to scratch, always have a full structural survey done so you know exactly what you’re buying. A full survey will explore the property’s structure, flagging up any potentially costly issues with subsidence, roof problems or damp.