There is much to think about when investing in property. Whether you are a seasoned investor or letting for the first time, this checklist may throw up a few things you might not have thought of...
The Right House at the Right Price
It all starts with the right house, flat or property. You will not get a good ROI (Return On Investment) if you have paid over the odds for your property. Worse still, borrowing excessively so your letting yield does not cover the cost of the mortgage. Using this scenario as the worst-case example the principle is true at any level. Pay the right price for a good property.
The Area
A good house is made even better if it’s in the right area. That is not only is it a nice area but is there a good balanced mix of both let properties and private residential homes? This gives you options when it comes to selling and letting.
How Will You Let Your Property
There are many agents who will provide different levels of service for a relatively small fee. Everything from collecting rent to finding and vetting your potential tenants. Some will even pay you a rental income before they have placed tenants. Maintenance and guidance on legal obligations can also be taken care of or you can opt for a halfway house where the letting agent will take care of some of these things, while you take care of the rest.
Tenants
If you choose to find your own tenants then you will need to set up a bank account, arrange references, set aside some time to meet tenants, so it’s worth paying a good letting agent who will take care of this for you.
Rental Income
It is important to get the figures right. You want to let your house and hopefully make a profit on any potential borrowings you may owe on the house or any maintenance and repairs and what you charge your tenants. The best way to do this is to create a spreadsheet and break down all costs on a monthly basis.
Potential Expenses
While you are on your spreadsheet, think of expenses such as maintenance; boiler services, electric appliance testing and budget for the unexpected like repairs or potential appliance replacement if applicable.
Remember Legal Obligations and Contracts
Check out any legal obligations and make sure your property is up to scratch to avoid any unexpected expenditure, for example is your fuse box obsolete? Also, you will need a contract to protect your tenants and yourself legally.
Development Potential
Perhaps you have no intention of letting your house, you are simply going to restore it, or modernise it, then sell it. Perhaps you will improve your property, then let for a time then sell it. Whichever you choose, consider market conditions and if you can stick to your budget. Try and find a property with plenty of development potential so you can add value to your investment.
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