Property can be extremely lucrative. In fact, when it comes down to it, there are very few ways to invest your money better, this is because the risks are relatively low, property prices increase each year so your investment goes up and there’s always a demand for places to live. You can make a substantial amount of money in a short period of time, or make an investment and watch it grow depending on the route you take.
Here’s what you need to consider.
Consider How You’ll Make You Money
There are a lot of ways you can make money with property, so your first step is to work out how you want to go about it. It could be renting student properties, apartments for single working professionals, luxury homes for families or even tap into the holiday rental market. You could flip houses for a profit since selling can be easy when you know what kind of market you’re selling to, or you could even become a silent investor and give a cash injection in return for a cut of the profits once it’s all sold. The reason property makes such a great investment is that it grows in value. As a rule it will go up in value year on year, and is always going to be in demand. And an investment that continues growing each year but without risk really is the ideal scenario.
Get Your Financing Right
The money you will need to put in will depend on the route you go down. If for example you’re renting out properties then you may only need enough money to cover a deposit, as from there you can take out buy to let mortgages (buy to let mortgages will generally require 25% of the homes value to be put down, which is higher than standard deposits). Your tenants monthly rent payments will cover this and over time, the house will be bought outright you can continue to rent or sell from there. If you want to flip houses or build new properties then you’ll need money up front, either in the form of savings, inheritance or a loan.
Do Your Research
Do your research and get clued up about the property business, this gives you the best chance of getting things right. Find out things like which markets different properties will appeal to, as then you’ll know how to present each and how much to spend on it. If you’re going to rent, it makes sense to know what yours and your tenants rights are from the get go. If you plan on doing work yourself to save money, you could even get qualified in a trade by attending college part time. This could be anything from carpentry to plumbing, bricklaying, decorating or carpet fitting. You’ll learn new skills and could save yourself tons of cash in the process.
Know the Pitfalls
Once you have done your research, hopefully, you will have highlighted some of the pitfalls or complications with your plan. That is not to put you off, rather if you prepare for them hopefully you can minimize any damage, or better yet, avoid it altogether. Here is one example, a common problem when opting to pursue the rental buy-to-let route is the potential problems with tenants. Of course, you need tenants as they will be the ones paying your mortgage or rental yield yet you need to be mindful that any period the property is sat empty it will not be bringing in any money. To add to this the mortgage and bills still need to be paid. Therefore you want to ensure you have sufficient funds to cover any periods that the property is not being let. It may be that there are tenants in your property yet your rental income is still not being received and they are going into arrears. This can be a difficult and time-consuming problem to rectify and to avoid it happening in the first place consider opting for tenant screening services before agreeing upon a rental contract. Further, there are other considerations such as the ongoing maintenance of the property, this will fall to you and you will be responsible to fix and repair any issues such as burst pipes, faulty electrics. You need to think carefully about your options as if this is not a responsibility you do not want then you can hire companies to take care of this aspect for you, but of course, it comes at a price. Will your monthly rental cover this fee and what impact will it have on your profit? So you can see, Identifying all the potential problems beforehand will put you in the best place to manage them when they arise and hopefully keep your profits in tact.