Property investment is a lucrative and rewarding venture with many benefits. From rental returns to capital appreciation to stamp duty, there are several factors to consider. It is worth doing as much research as you can before investing in a buy to let property, and these five tips should help you be prepared and make the best investment choices for you.
- Rental Yields
Rental yields are really important when it comes to property investment. A rental yield allows you to find out how profitable an investment is, based on the amount you paid for it compared to the amount of monthly rent you received. Rental yields can vary across different types of property and different areas, so they’re a good point of comparison between potential investments. In 2018, the average UK rental yield was 3.6%, so a property with this rental yield or higher should be a good choice.
- Location, Location, Location
Location can make or break a property investment, and the UK has huge regional differences when it comes to property prices and rental returns. Several areas in the UK continue to provide investors with lucrative yields, mainly in the north-west. House price growth in these areas far outperforms the UK average, and property prices are also more affordable than in the south. Property investment specialists RW Invest have focussed on the north-west as a region for growth, with property investment opportunities in cities like Liverpool and Manchester. These areas have demonstrated considerable price growth, as well as strong rental yields, with a total of six Liverpool postcodes in the top 25 buy-to-let postcodes in the UK.
- Not Just Residential
One thing potential property investors might not be aware of is the variety of different property investment opportunities available. Student property investment is a lucrative strategy, with high yields, a lesser chance of vacancies, and often exemption from stamp duty. Commercial property is another potential avenue for investment, with office space, warehousing and retail space all providing ways to diversify your property portfolio.
- Know Your Costs
Another essential thing that property investors should bear in mind is the potential costs that they may have to pay alongside the property purchase. There are extra costs that you may need to cover, and if you know these before you invest, you can incorporate them into your budget. Some of these costs will be necessary throughout your investment, like ground rent and maintenance costs. There may be other costs which are related to your purchase, such as solicitor’s fees, stamp duty, furniture packs and mortgage fees. If you are considering taking out a buy to let mortgage, then you will need to put more down as a deposit than residential property. Often this is at least 30%, so make sure you have enough funds available.
- Plan Ahead
It’s also a good idea to plan ahead if you are going to start investing in property. Think about what you want to achieve, what your long-term goals are and how much money you’d like to make. By thinking ahead, you can make clear priorities and make sure that potential properties you are considering fit your criteria.
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