24 Dec A Design Guide to Property Investment
When considering how to make your money work there are a few strategies to consider
Buy to Let
Buy up property or existing portfolios which have a guaranteed yield covering more than any loan and or producing the regular monthlies you desire.
Renovation
Buy property that can be renovated for less than the uplift in value, researching on potential investment areas is a must
Value uplift
This is where real money can be made changing the appeal
(See below our hints and tips for investors)
Location
Once you have made the decision to get into investing you will need to decide where, location is key for your buy to let investment and picking specific area with rent appeal and property value increase is essential.
What is the market doing?
It has been well advertised the property market in the UK has suffered some dramatic change in house prices and new tax prices. However, making the right choices in investment will always be one of the safest bets for making money from money. The demand for UK rental properties in 2019 continued to rise with more emphasis on high quality rental options
Risks
You must know the risk before investing, how much will it cost to purchase, renovate, what return it will bring in and will it increase in value. Look at the wider environment too, are there any planned schemes that will negatively affect the value or appeal? Of course, any investment has a risk, but property remains a far safer bet than buying shares.
Getting the best return or yield
When a yield is guaranteed by the developer or vendor you will pay the market price, with a mark-up based on its yield. This will generally mean you will get your money back and more, but it will take longer. When you look at rental areas rising in desirability you might find something worth spending money on to match nearby Tennent appeal.
These come in a wide variety from DSS to doctors and everything in between, your property will need to have the expected living standards of its potential occupants. Not only the quality of the property but its location, being next to a hospital won’t guarantee a health professional if the area is of high risk for crime.
Refurbished or off plan
If your property is ready to go to the target market you will find it very difficult to get it at a good price as the previous investor will have maximised this based on generated income. Buying off plan whether it is planning to decorate or change its planning classification will always give you a greater return.
Uplifting the value
Here is the sweet spot and with good advice this is where the real money can be made if you employ property experts or designers to work with you a value uplift can be as simple as decoration or a new bathroom. However, it can also mean changing the planning classification and some external re styling to appeal to a different tenant. Maybe some small extension or converting the roof could add another apartment or couple of rooms to an HMO.
Have an Exit strategy
The longer you leave your money in the more you get on sale, right? Wrong, this is not always the case, the risk of inflation and a depressed market are ever present. Decide on the return you want to get and leave yourself in for that time only. Capital growth and rental income can mean different times scale and strategies need to be employed.
What is your management strategy?
This comes in two simple categories, do it yourself or employ an established property management or maintenance company. If you are hands on and well organised of course you can deal with the day to issues that arise in rented property, however once your portfolio grows the sheer volume of meetings, calls and arrangements will over run your capability leading to “balls” being dropped.
Should you get a but to let mortgage?
This is the common way to secure the funds if you don’t have them available, these mortgages will require a hefty deposit and will mean little to no rental profits. Doing multiple properties on buy to let mortgages can add.
Do your research!
Make sure you are buying form a credible source, property developers are out to make money and as much of it as possible, beware people off loading assets below value. Make sure you visit the site and check the surrounding areas; will it be suitable for the tenants you want to home. If you are looking to uplift the value talk to architects or architectural designers. Valuation and price trends can come from estate agents and or surveyors.
Have you factored in taxation?
The tax system constantly changes, often to pick the pockets of unfortunate landlords. Make sure you are fully up to speed on the amount of tax you will pay not only on purchase, but capital gains, corporation and income tax.
Furnished or unfurnished?
The pros and cons are blatantly obvious here, a lavishly furnished property will attract the right client for the right prices. However, at the lower end of the market sits students and those on welfare who may not be able to furnish the property. The more you provide the more maintenance and depreciation you will face.
Growing your portfolio
If your first purchase is successful and you have an appetite to add to your property list, follow the same steps as before. Our advice would be to edge your bets, don’t have two student lets on the same street in the same town as any issues with one may well affect the other. Do bare in mind the logistic of having one property in Hull and one in Liverpool as it will lead to higher expenses.