Anyone with spare money to invest nowadays has virtually unlimited choices. In times past investors could choose between property, stocks and shares or just leave their cash in the bank to accumulate interest over time.
Now there are carbon credits, offshore funds and all manner of innovative ways to invest cash with varying levels of risk and personal input from the investor.
Investing in property is a hands on experience so even if you hire a property management agent there will still be legislation you need to comply with and the associated paperwork that comes along with it. If you can’t deal with all this then leave your cash sitting in the bank where it will earn you zero interest but at least you’ll get a hassle free existence. If you quite simply don’t have the time required to invest in property because of your day job then it is perhaps not for you.
Buying into the property market is also not for those who want to make a fast buck. You have to be prepared to tie up your cash for the long term if need be. Never forget that properties, once purchased need to be maintained and you need to set aside the money to do this or you’ll soon be in trouble.
You’ll also need good all-round people skills and polite telephone manner to deal with tenants and workmen on a regular basis and must be prepared to remain contactable at all times in the case of an emergency.
There has never been a better time to buy into the property market than now since property prices have dropped back to a more affordable level and mortgage interest is so low. Building a property portfolio can easily be an achievable goal for those with an entrepreneurial nature and a dream to be realised. Many successful businesses have been established and built up in times of recession.
With the limitless amount of property related portals on the Internet nowadays it is easy to gauge whether a property you have you eye on will make a sound investment. You can compare any potential property purchase with another without even stepping inside an estate agent or an auction room.
MSN Real Estate has a wealth of valuable information for those property investors based in the USA and Rightmove is also invaluable in all aspects of property both at home and abroad.
Your best plan of action is to keep detailed records of estimated expenditure from the onset and remember that everything needs to be factored in to the equation, not just the monthly mortgage payment that the rental income has to cover. What about void periods and those times when the rent is late in coming or doesn’t get paid at all? You will still have to meet your obligations to the lender whatever happens! It can be so easy to underestimate costs which can soon lead to disaster if you run out of funds. This is wise to bear in mind especially when purchasing an older property or a renovation.
You will need to find out the achievable rent in the area you are buying into and make sure the property you chose is in a popular neighbour where tenants will want to be. The beauty of property portals means you can find out where all the schools and transport links are located in any given area and you will also come to know the places to avoid.
The trick is to get all the available information with regards to property, area and finance before you make any commitment. Mistakes regarding property investment are notoriously difficult to put right and can be the downfall of the novice investor if there is no realistic way to turn the situation round.
How far away from your own home will your investment property be located? If it is in the next street then it is perhaps a great idea to manage it yourself but if it is over five miles away you would be better off paying an agency to manage it for you and pay them a proportion of the monthly income (usually about 10 -12%).
As a property investor, you can never have too many contingency plans to help you through those times when the situation goes against you. Always heed the advice of property related professionals such as reputable builders, surveyors and estate agents of long standing who know what they’re talking about and can prevent you from making costly errors regarding property investment.