There are many forms of investment to choose from, and one of the most popular ones is real estate. In particular, the market for buying homes, and then renting them out over the long term remain strong, but before you dive in with both feet, read the post below that details all the things you need to consider.
It is something of a cliche in the property world that location is the most critical factor to consider. However, that doesn’t mean that it isn’t true! In fact, choosing the right position in which to purchase a home to lease out to other can make or break your investment.
The reason for this is that the market that the property will appeal to is closely linked to the location. What this means is that people are more likely to comprise on the size and decorative condition when renting that they are on the location. This may be because they need to be close to public transport to get to work, or that they desire to live in a safe and green neighborhood for their kids. However, whatever the reasons, as the location is so important it is something you must give the utmost consideration to before buying your property to lease.
Next, comes the type of property you will buy to lease out. Most folks think that this is choice between a house and an apartment with many people favoring the house because they feel they can charge more for this per month and so make a better return. However, this isn’t always the case, as the amount you can charge for rent is not only based on the size of the place but also the location. What that means is that you can ask a more considerable rent for an apartment in a highly desirable city location, that you can of a house that is in a less desirable neighborhood.
Also, it is worth bearing in mind that there are many more property options to investment apart from a residential home or apartment. On such choice is commercial property that can be very profitable to rent out.
Then there are vacation lets that can be charged at a high price during peak season, something that can make you a decent profit with only a minimum year-round occupancy. To that end, it is essential that you don’t rule out any particular type of building as an investment before you have made an effort to look into them and run the numbers to see if they are viable.
Once you have looked at the location and type of property to invest in, its time to consider the factor of cost. This factor is, of course, a major one, because if you can’t raise the capital in the first place to invest in the property, you aren’t going to get very far.
Cost is also another critical factor because it controls how much you can charge per month for the lease. In fact, working this out can be a quite complicated process, luckily there are tools available such as this cap rate calculator that can help you to do this. In fact, using this type of tool can make your return rate predictions a lot more accurate and so you can minimize the risk of investing as much as possible.
Age and condition
Once you have considered cost, it’s also wise to look at the age and conditions the property you are looking at investing in.
In particular, age can be a double-edged sword, because many people like to live in older buildings because they are seen as more characterful. In fact, some folks will pay a premium for them.
However, such residences can also need a lot of renovation and maintenance work to bring them up to standard before renting them out. Also, some buildings are protected by law because of their age and historical significance. This issue can be problematic because it means you have to jump through all sort of hoops when doing even the most simple remediation like replacing a rotted window frame. Something that is, of course, worth bearing in mind, before you sign on the dotted line.
The condition of a structure is not wholly reliant on its age though, as there can be relatively new builds that need extensive renovation work as well, especially if they have flat roofs that do not allow water to drain off effectively.
With this in mind, it is vital that you engage a high-quality surveyor that can tell you about the condition of the deeper structure of the building as well as just the surface decor factors. By doing so, you can severely reduce your risk of being stung with unexpected bills later on.
One of the things that many people love about buying to let is that you have two options for profit. The first is the monthly fee that you collect from the residents, and if you have purchased the place outright this, this profit can go straight into your pocket.
The second way that you can make money on a buy to let property is to sell it after a certain amount of time and pocket any profits that are made. Of course, to benefit from this, you will need to hold onto the property while it appreciates and sell it when the market is high.
Another fantastic thing about buying a property to rent is that you don’t have to do too much work if you don’t want to, once the property is up and running. In fact, you will find a myriad of well organized and reliable property management companies that will do everything for you from showing round potential tenants, to getting appliances fixes, and even dealing with plumbing emergencies.
What this means is that by investing in buy to let properties you have the potential to get a decent rate of return, while doing very little day to day. Something that makes it a fantastic investment option for anyone looking to expand their portfolio without too much effort.