Some property investments can be very wise moves indeed and prove to be extremely profitable. However, make a mistake and it could cost you dearly. Here are some important factors to think about before you invest in a property:
- Location is key
This is where you should begin and is possibly the most crucial element. If you wouldn’t choose that location to reside then why would anybody else? Location is what is going to draw in potential tenants. If you’re aiming to invest in a family home, then close to schools and amenities is essential. If you’re looking for young professionals, then think about local transport links and commute times. For students, you’ll need a nearby college or university etc.
- Your tenant
Some landlords desire only families, whilst others see more profit potential in sharers, students or young professionals. Don’t be too quick to rule out housing benefit either as the rent can sometimes be better than private sector renting with money paid directly from the local authority.
Don’t dismiss run down, cheaper properties that might have excellent potential after renovation. Living rooms can be converted into additional bedrooms, an extension could be built, and a refurbishment could make the property a profitable project.
Always read the lease from start to finish before you part with your money. You’ll need to know if there is permission to sublet and whether there are any further restrictions like no pets. Any lease conditions will have an impact on your ability to let and what is allowed on the property.
- All the costs
You’ll also need to factor in the cost of using Block Management Services to deal with the day-to-day running and maintenance of your property. For more information, visit http://www.completepropertygroup.co.uk/property-block-and-estate-management/ Some landlords decide to manage properties by themselves but this can be incredibly time-consuming. It’s often far better to leave it to the professionals and let them take a percentage of the rental fee. This leaves you free to concentrate on your next project.
- Don’t get caught out
With leaseholds like flats and apartments, factor in the service charge which can be a couple of hundred each month in some areas. This will have an impact on your net rental return. Before buying a leasehold property, ask about the annual charge and if there are any significant repairs or renovations scheduled in the near future. Also ask whether there is a reserve fund to cover emergencies and major works.
- Calculate the yield
When you have fully considered all of the above points, you will be able to work out the actual yield and whether the property makes good commercial sense. Think medium to long-term as well as just yield for the immediate future. Once you’ve taken all the above into account, now is the time to work out the real yield and if this property makes financial sense.