Thinking about investing in your first property?
The property market is one of the most lucrative investment opportunities for people looking to grow their wealth. But, it’s not always as easy as it sounds. Property investment requires a lot of research and preparation. You’ll need to have a thorough understanding of what you can and cannot afford before making the jump into property investing.
The following tips will help get you started on your journey as a first-time property investor.
Understand the finances
A big mistake many first-time investors make is underestimating the costs that come with property investment. There are many costs involved in purchasing, running, and managing an investment property. Oftentimes, investors might underestimate costs such as repairs or taxes and insurance. Understanding all the extras costs will ensure that investors maintain a positive cash flow.
Consider the risks and rewards
Whether your first purchase is high or low, a small or big property, move-in ready, or a fixer-upper, every investor should consider the risks and rewards. Some aspects to consider include:
- Potential cash flow
- Market predictions
- Tenants
- Location
- Taxes
Be realistic
When calculating your return on investment (ROI), you need to be realistic about what type of return you want. If your primary goal is earning passive income, then it may not make sense for you to invest in properties that require significant renovations or repairs before they can be rented out. Instead, you should look at properties with high rental yields and low purchase prices.
Understand the laws
There are many legal obligations potential investors should be aware of prior to buying an investment property. Landlords must know and enforce tenants’ rights, including but not limited to, protecting tenant’s deposit, providing an Energy Performance Certificate, making sure all gas and electrical equipment are safely installed and maintained, and keeping the property safe and free from health hazards. Understanding the laws will help you avoid unwanted legal situations and fines.
Research potential properties
One of the most important things to do before buying a property is research. You need to know what’s available, where it is located, and how much different properties are valued at. This will help you make better decisions about which properties are worth pursuing. An excellent place to start your research is online on property portals such as Rightmove and Zoopla. You can also use our search tool to search for properties in your chosen area.
Find the right location
Researching an area prior to buying a property can help make the difference between a very good or very bad investment experience. The best way to make the most profit is by picking a location that is booming and growing in size. Some factors that create a profitable area include a low crime rate, a good school districts, and a boosting job market. The right location will also produce a larger population of potential renters.
Managing the property
After investing in a property, you will need to decide whether you want to hire a property management company or manage the property yourself. Although hiring a property manager can be a sizeable expense, there is a lot of value in working with experienced professionals. Not only do management companies bring their expertise, but they also work directly with tenants by completing maintenance work, collecting rents, giving eviction notices, and more. Ultimately, management companies are a great investment to make any property investment business easier.
Bottom line
Like all investment decision, the best property investments are the ones that best serve you, the investor. Think about how much time you have, how much capital you’re willing to invest and whether you want to be the one who deals with issues that inevitably come up.
Are you considering buying an investment property in Liverpool?
Contact us today to find out about our property services and how we can help you. 0151 372 2033.
