Investing in Property: Property Investment Guide
16th Mar, 2016
Thinking of investing in property and not sure how to get started? Discover some essential considerations and useful advice to bear in mind as you take your first step on the property investment ladder with our handy property investment guide.
Why Invest in Property?
Investing in property offers an excellent opportunity to put your money to work. As an alternative to keeping savings in bank accounts paying low interest rates or to experimenting with unpredictable stock markets, property investment offers a more reliable investment opportunity with potential for solid rewards.
That said, there are of course risks to any investment and the best way to protect yourself is to learn all you can about potential pitfalls before making a commitment.
Top Tips for Investing in Property
When you're buying a property purely for investment purposes, you need to look at your options differently than you would when looking for a home you'd live in yourself. Try and take personal tastes and preferences out of the equation – after all, what's one man's dream house may be another's nightmare.
Don't imagine yourself enjoying setting up home in the properties you view, think instead of how they might meet the needs of your target tenants, whether those are young professionals, students or families. Considerpractical and measurable facts, like the age of the heating system, the exact square footage and the quality of the windows.
Best Places to Invest in Property
For a property to truly be a good investment, it must offer a number of benefits to renters and future buyers – and the area it's in is a very important part of this. Ask yourself whether a property is in an up and coming neighbourhood, what kind of amenities are available, which schools it's nearby and how well served it is by public transport.
You may be tempted to invest in a property in your hometown or close to where you live and there are advantages to this – you already know the area's plus points and downsides – but it's also worth thinking further afield. Ideally, you want to invest in property in an area that holds a specific appeal, whether that's access to top universities or a good quality of life on a commuter belt, as well as one that matches your ability to buy and your tenant preferences.
Choosing a Buy-to-Let Mortgage
Ideally, an investment property should yield around 125 per cent of the mortgage payments in rent. To meet this target, you not only have to choose your investment property wisely, you also need to select the best mortgage provider to suit your needs.
When investing in a buy-to-let property, most banks and building societies expect a 25 per cent deposit and there are a number of additional fees to consider. It's worth talking to an independent mortgage advisor who can make you aware of any particular opportunities or problems to watch out for in your specific circumstances.
Investing in New Builds
A new build can offer significant advantages for property investors. Unlike older buildings, they will need no major renovations or time investments to make them market-ready and fixtures and fittings will not only be new, they'll also be neutral – so you can easily create the right environment to attract your ideal tenants.
You're also less likely to have your purchase held up by the kind of problems that can stymie mortgage applications for older buildings, such as extra structural or engineer reports. Find out more about investment opportunities with Lovell Homes and discover the potential benefits of new build property investments.