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The Need-to-Knows of Property Investment

BTL Property - To Let Sign

If you’ve been wanting to invest in property for the first time but you’re not sure where to start, you’re in the right place. Investing is a very popular option with increasing numbers of people getting involved, but before jumping in, you need to make sure you’re doing plenty of research. There are lots of advantages to investing, but knowing about the risks is also important, which is why We Buy Any House have answered some of the need-to-know questions of property investment.

Can I invest on my own?

Investing in property is one of the biggest commitments that you can make, so knowing the different approaches can make a big difference to the level of risk and which is most suitable for you;

Becoming a sole investor:

 As a first-time investor, going in alone can be an attractive option as you will have full control and be able to do what you want with the profits; however, it’s a more expensive option, and you’ll need to be in a strong financial position to cover the costs. You’ll also be fully responsible for your investment, which means if something goes wrong, you’ve got to be able to deal with it. Any kind of investment holds its risks, though, and sole investment lets you be completely in control and reap all the benefits without having to split with other partners.

Investing with other partners:

 Another popular option for first-time investors is moving forward with others, allowing you to split the costs, so it requires less capital. It also means you can share the responsibility and the risks with the other investors involved, which reduces the risk and the stress that can come from investing alone.

What’s the best property to invest in?

When you look at investing in property, there are two typical paths that you can go down:

Buying to Let

With this method, you invest in property that is going to be rented out. Your profits will come over time with the monthly rental payments, but it will take some time to make a profit.

Buying to sell:

For investors looking to buy and sell property, you will purchase a property which is damaged and in poor condition, spend some time renovating it to increase the property value, and then sell it to see a profit. This is a faster way to see profit, but the risks that come with it are very different compared to buying to let, and you’ll need to either know how to do the work yourself or be able to afford to pay someone who can before you sell.

Does it take long to be in profit?

If you’re looking to invest, you need to know from the start that it’s a long-term process and that you need to be patient. While buying to sell generally is a faster way to make a profit, it’s still a long process and cannot be rushed. When you start your investment journey, you should make a plan which will show you at what point you will make a profit.

For buy to let investments, you’ll be given a percentage that will tell you your return each year. A higher yield is better, so you can research the areas you want to invest in and see which is the best opportunity for you. The key is to not go into investing expecting to make a huge amount of money immediately; it takes time to see growth.

Costs of a Landlord

How much does it cost?

There’s no set cost to how much it costs to start investing, but the start-up funds needed are one of the main reasons that first-time investors will often work with partners, as it makes it much easier to save up the amount needed to move forward. However, you also need to remember that you don’t just need to be able to afford the investment itself; you also need extra funds available to deal with any potential risks or repairs that come your way.

Investing in property comes with plenty of risks, and if something goes wrong in the property, you need to be able to afford to rectify it to be able to continue making money. Another risk that you should be aware of if you’re looking at investing in a buy to let property is the potential of problem tenants. An investor’s worst nightmare is a tenant that refuses to pay rent, which will mean that your income stops, and you won’t hit profit for a longer period. Knowing that you need extra funds than just the bare minimum is essential, and always make sure that you aren’t going into investing expecting to get rich quick.

Is it full-time or part-time?

Investing can be personalised to your budget and situation, but first-time investors will generally look at a part-time option first while they learn the ins and outs. This way, you can still have another source of income to support you and give you more security compared to going all-in from the start.

Investing full-time is still an option, and for some investors becomes a great decision that gives them a strong, sole income, so it’s recommended to start with part-time investing and develop from there.

Investing is a huge commitment, so doing your research beforehand is vital to reduce your risks and have the best chance of success. Know your budget and make your plans in advance, and you’ll see the amazing payoff that property investment can offer!

This guest post was provided by Holly Herbert from WeBuyAnyHouse. The opinions expressed by the guest writer above and those providing comments are theirs alone, and do not necessarily reflect the opinions of SevenCapital or any employee thereof. SevenCapital is not responsible for the accuracy of any of the information supplied by the guest writer.

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