It is possible to make a good level of returns by investing in property. In general, property prices rise, which makes it hard not to generate a profit. But, it is possible which is why you need this guide to property investing.
Set Your Parameters
If you’re new to property investing it can all seem bewildering or overwhelming. In this instance, t is best to start cautiously. You can get specialist help regarding where to buy an investment property. But, first of all, you need to know what you want. That means thinking about:
Type of property investment
You can purchase a property to rent and enjoy the income. It’s also possible to ‘flip’ a property, simply renovate it and sell it for more. Another approach is to buy into a trust. In this scenario, your money is shared with other investors and properties are purchased by the fund managers. This approach reduces personal risk and allows you to start investing for less.
Whether you’re looking for Liverpool investment property for sale or the best buy-to-let hotspots – you need to have some idea of where you’re going before jumping into the process.
However, there is no right or wrong way to invest, you simply need to choose the option which most appeals to you.
Budget
Of course, before you can invest in anything you need to know how much you can spend. That means looking at your savings or current equity to decide the deposit you can afford. You’ll also need to speak to your bank or a financial advisor regarding how much you can borrow.
This will tell you the maximum price of property you can afford.
Investment Strategy
Once you’ve decided how you would like to enter the property investment market and what you can afford, you’ll be ready to make your first investment.
However, you need to decide what strategy you will be adopting. Having a plan makes it more likely that your investment will be successful.
One of the most common strategies is called negative gearing. In this instance, you borrow to purchase the property and the cost of your monthly loan and maintenance payments exceed the rental income. The approach helps you to reduce tax bills today and, should still result in a good profit in the future as house prices rise.
The alternative is to use a positive cash strategy. In this scenario the rental income exceeds your running and loan costs, allowing you to pay down your mortgage faster.
Your preferred strategy will depend on your current financial well-being and the type of property you’re investing in.
Locating The Property
Whether you’re looking to rent your property out or flip one, there are a lot of factors that need to be considered. For example, how desirable is the location? Are their shops and schools nearby?
The more attractive the location is the easier it will be to rent or flip a property. That makes it more likely that you will get a healthy return on your investment. Of course, there are no guarantees. You should think about all your options before you start investing and always make sure you can afford to cover all the bills.
