Investing in property is one of the best ways to build yourself an income and increase your wealth, and with the current markets, it is probably one of the less risky options available in terms of investing your money. That being said, it is always a good idea to properly investigate and weigh up the options with any investment, and with the following handy tips and tricks, we’re hoping to guide you in making the best decision when it comes to investing your hard-earned money into property.

Make sure you’re ready for Property Investing

If this is an avenue that you are seriously considering, you need to ensure that it makes financial sense to you in your current circumstances, and whether you can actually afford to invest. It has been recommended that you have at least £50,000 available to you, before you even begin. This amount would be for the deposit, first instalment and for the costs that most don’t think of beforehand – the maintenance required on the property and the taxes etc. By thinking of your investment as a business venture, be sure to keep your budget and future plans for the property in mind.

You will also need to conduct a certain amount of research when it comes to purchasing a property. By making use of a property investment company such as Metric Investments, it can make this process a lot easier, however you will still need to put in many hours of figuring out whether certain investments are a good fit for you, and your requirements of the properties, and to follow the current markets and trends. Besides, keeping yourself informed when it comes to your business decisions and how outside factors may affect you is always a good idea.  

Although we mentioned that investing in property as being a considerably lower risk than most investments, there is still a certain level of risk involved, and the question you have to ask yourself, is whether you are prepared to take this risk? It’s vitally important to familiarise yourself with the possible risks, so that should any of these affect your investment, you have steps preparing you ahead of time. We detail these below.

What are the risks in Property Investment?

The main risks in property investments are as follows:

 Property market fluctuations

You have to take into consideration that your property may very well decrease in value, depending on the property market. However, if you keep abreast of the predictions and conduct research before jumping into buying any property, you can lower the chances of this happening.

 Unpleasant Tenants

Having an unreliable tenant is every landlords worst nightmare, however, there are way to avoid this. Doing correct screening on viable tenants can make all the difference. You can get a property management company such as Metric Investments to do this, or you could set some time aside and do this yourself. By checking on the employment history, or by running credit checks, you should be able to gain valuable insight as to whether certain tenants may become problematic or not. Tenants who do not pay their rent or who make damages to your property could really hurt your rental income, and thus proper preparation in this regard is highly recommended.

Prepare yourself and understand what’s involved

Investing in property, whether within the U.K. or globally, can be extremely rewarding, however it also requires a lot of preparation. Specifically in the U.K., there are certain rules and legal requirements that need to be followed and adhered to. Mainly, you need to familiarise yourself with your tax obligations, because not doing so could land you in some seriously hot water. Further to this, you also need to make sure that you are fully protected and clued up on tenancy law, if of course you are planning on renting out your properties. This includes have certain documentation prepared and ready, as well as protecting your tenants deposit in a tenancy deposit scheme.

Buy-to-Let vs. Buy-to-Sell

These two strategies are the most commonly use strategies used when it comes to investing in property. Buying to let is the most popular strategy, which includes residential letting, holiday letting and HMO’s (house in multiple occupation - when at least 3 tenants live there, forming more than 1 household) to name a few. These two strategies offer the best returns on your investment, hence their popularity. By figuring out which of these two strategies will work best for you, you can look out for an investment property best suited to these needs.

Buy-to-let

When an investor purchases a property for the sole purpose of renting it out in order to receive a rental income. The rental market is currently thriving in the U.K. with many fantastic developments taking place all over the U.K., and surrounding areas. The demand for quality rental property is extremely high right now, so this is a great option should you be considering it.

Buy-to-Sell

Also know as “flipping” houses, is a lucrative investment strategy, when done correctly. It involves purchasing a property that may need refurbishing and/or improvements/upgrades, doing said improvements and then selling it for an increased price. This method is often used by property developers, who completely transform a house or apartment and substantially boost the property value once the project is complete.

Keep a positive mindset

Research has shown that those who actively keep a more positive mindset are more likely to make better business decisions and think rationally, allowing you to absorb new information, and remain motivated. Trust your judgement and instincts and constantly remind yourself why you are investing in a property, that it will be a success, and nine times out of ten, it will be. Try to remain positive, also while being realistic.  

 And lastly, wherever you decide to begin, remember to start small. Take your time to do the research, consider your options and if needed, seek professional advice before you jump all-in. Remember not to spend what you cannot afford, and build your portfolio cautiously at first, growing as you gain your confidence and become comfortable in your property investment strategy.