More and more people in the UK these days have decided that pensions and other high risk investments could leave them facing a less than financially secure future. With this in mind, many have decided to look at lower risk investments in order to enable them to provide a more promising, secure and brighter future for themselves and their loved ones.
For a huge number of people who have the commitment, drive and patience to opt for long term investment, purchasing property has provided the ideal solution.
Becoming a successful property investor is something that could make you a lot of money over the long term, particularly if you remain committed and work on growing your portfolio of properties. Of course, as a first time property investor you need to know what steps to take in order to get the ball rolling. Investing in property can be extremely lucrative but you also need to remember that first time property investment can be something of a minefield, so you need to make sure you know the best route to take.
In the same way as you need to take vital steps when purchasing a property for yourself as a home, you also need to take important steps when buying a property to rent out by way of a long term investment. Some of the key steps that you should take include:
The first thing you need to do is sort out your finances and work out how much you have or can borrow to put towards your investment. Some people find the property first and then look at finances. However, this can waste time as you could end up spending time looking at properties that you cannot raise the money to buy. So, it is always worth sorting finances first so that you know exactly what your maximum budget is. You can do this by looking at your savings if you have any, checking your equity levels in your current home to see whether releasing some of that could be an option, or seeing a lender about getting a buy to let mortgage.
Once you know how much money you have available for your investment, you can set about looking for a property. There are a number of ways in which you can do this. For instance, you can look on the open market and go through estate agents or online. Alternatively, you may prefer to go to a property auction to see whether you can pick up any bargain properties using that method. When you are looking for a property, however, you need to make sure you do not focus solely on the price. You also need to consider the area and location in terms of amenities, transport links and what the area itself is like. In addition, you need to consider the property itself in terms of suitability for your target tenant group.
You then need to go through all of the red tape, which means getting the property valued and getting a property solicitor on board to sort out all of the legalities and contracts. This can sometimes be a time consuming process depending on whether any issues arise but hiring specialist legal assistance can help to speed things along.
Once you’ve purchased the property, you need to make sure that it is in a good state of repair and ready for renting out. If you have purchased a relatively new property you may not need to do much – or anything – to it. However, if you have bought a property that requires a lot of work and repairs, make sure this is dealt with before you rent it out.
When the property is in a good state of repair, nicely decorated and read to rent, you can start looking for suitable tenants. This isn’t an easy task, particularly if you are doing this for the first time. There are all sorts of processes involved such as advertising for suitable tenants, carrying out credit checks, drawing up tenancy agreements, and more. One thing that can make this easier is to get a property management company on board, as they will be able to handle all of this side of things for you. This means everything from advertising your property to rent through to finding tenants, carrying out credit checks, drawing up tenancy agreements, going through these agreements, carrying out an inventory prior to letting and more. They can also deal with repairs once you have tenants in your property.
While it may take a little while to start seeing real profits, your property investor skills will eventually enable you to grow your portfolio. Of course, if you purchased the property outright and have no mortgage on it, any rental income will be profit, which you can plough back into another property right away. If you have taken a mortgage out on your first rental property you need to ensure that you are able to comfortably cover the repayments before you decide whether you want to use the remainder of the rental income towards purchasing another rental home.
Whether you purchase on property for renting out and then slowly build up your portfolio over a number of years or whether you are lucky enough to be able to build your portfolio more quickly, you will find that this type of investment can be extremely rewarding. Not only will you be able to accumulate assets in the form of property but you can also ensure that you and your loved ones get to enjoy financial security in the future with a low risk, long term investment.