Owning investment property can be a rewarding venture and depending on the type and location of the property it can meet short or long term profit goals. Planning to purchase a property for investment purposes includes many considerations, here we have provided a brief and broad property investment guide.
Whilst we’ve included some of our top tips below, for tailored advice according to your unique requirements one of our professional investment property experts can provide assistance.
With property prices now higher in most parts of the UK rental yield margins are often tighter, this combined with changes to applicable taxes and greater regulations in place mean anyone beginning or building their buy to let portfolio must be well informed about any purchase they make to put themselves in the best possible stead for a successful investment.
Short and long term goals
Landlords tend to have different priorities when it comes to the immediate income and capital growth goals they expect to achieve from an investment property.
For some an investment into property is one with long term goals, with capital growth expectations set for 5, 10 or 15 years’ time, whilst rental income is not totally irrelevant to these landlords as typically the rental return is expected to cover the cost of maintaining the property over this period.
Others might be looking at an investment to generate immediate income, there are some locations in the UK where this is possible, although rising property prices mean there are fewer areas where a high rental yield is possible.
One of the first considerations we discuss with our investment clients and something we would definitely include in a property investment guide, is time frames – what are the future plans for this investment. Strategically those building a portfolio with several properties might like to include different types of properties with different goals.
Where to buy investment property?
Considering the level of risk involved in the location where you would like to purchase a property is closely linked to your short and long term goals for the investment.
As a property investment guide the advice on where to buy a property differs according to an investors preferences as to risk and the time at which they are purchasing.
Whilst purchasing a property in an area which is yet to see the full potential of any ongoing regeneration or improvements to infrastructure might reap very large rewards in several years’ time there can be risk involved in the instance that any improvements are not entirely confirmed to be completed.
Many landlords prefer not to be too speculative and instead invest in areas which have a history of increasing prices and appeal to tenants or those which are currently undergoing improvements that are sure to happen.
Attracting good tenants
There are many different types of tenants; professionals, families, students, corporate relocations or short-term renters. Deciding which type of tenant you would like to attract will dictate the type of property you buy.
Whichever type of property you choose to buy, attracting a good tenant can be a lot to do with how a property is presented, it’s condition and the location including proximity to transport connections, green spaces and places of work. These are all factors to be considered when planning your property investment.
Professional management or self-management?
Professional investors often to prefer to employ the services of a professional management company; where the property is run entirely by that company, they will collect rent, communicate directly with tenants, oversee any maintenance and charge a % fee of the rent to do so.
Investors who live overseas also prefer to use a property management company as they cannot be nearby to deal with anything that arises and timely communication can be more difficult with a time difference.
Some investors prefer to take a ‘hands on’ approach, for those who are not put off managing a property themselves and live nearby this can work well. It is useful to have experience of managing a property if you’re going to do this as there are many rules in place that must be adhered to not only by tenants but by landlords to.
Investment exit strategy
Having an exit plan for your investment property from the very start is wise, it will allow you to set the property up in the best possible way for whatever your future plans might be – this is an extremely important consideration on one we would highlight within our property investment guide. Planning for the future of any investment from the outset is always wise.
It might be that you have a timeframe in mind and a point at which you intend to sell the property, or you might wish to leave the property to children; whatever your plans are it is wise to speak to a professional, independent financial advisor to discuss the applicable tax rules and implications.
Professional property finders
Wherever you are looking for a property in the UK our team of professional property finders are able to help with the planning and execution of your investment strategy.
This article hopes to act as a brief property investment guide however advice differs according to each investors individual situation, position and preferences.
If you are unsure of the exact location that would suit your investment plans within a certain locality your dedicated consultant will be able to demonstrate which areas would work best based on their experience, local knowledge and the property market data which they have exclusive access to including historic trends and current market conditions.