If you have money to invest, property remains (even in the current economic climate) a lucrative option. In fact, this is the perfect time to pick up property bargains to add to your portfolio.
And, reassuringly, housing transactions have stayed constant for the last four years at 1.2m per year (with some variation across the country). But thanks to fluctuating house prices and a lack of buyers, there are lots of potential investment opportunities for both established property investors and those just starting out with their property business.
Depending in your circumstances, there are different types of property business – you need to find the right one for you. Here are seven tips to help you get started.
What is a property business?
A property business can be anything from owning only one or two properties that support a pension plan or a large-scale cash-flow business boasting a rich portfolio of multiple properties.
But, what if you’re cash poor? Don’t worry you can still embark on creating a successful property business. In fact, in some cases, you don’t even have to buy the property yourself. Instead, you can act as a property ‘sourcer’ or join a partnership venture—either way, to get to reap the benefits of an investment.
So, if you’re new to the property investment market and you’re not sure where to start, here’s a quick run-down of what your options are:
Being a landlord isn’t for everyone. Also, thanks to a recent tax clampdown and the introduction of a 3 percent surcharge in stamp duty, the buy-to-let market has cooled down in recent years. The number of buy-to-let mortgages decreased by 36 percent between 2015 and 2017. Despite this, due to falling house prices, it’s still a good time to pick up a deal, which is great news for newbies.
Here are a few tips to kick-off your buy-to-let business:
- Find out about the housing market in your target area—can you afford it and is there a rental market?
- Know your tenant profile and make sure you cater to them (not yourself). For example, if you’re targeting young professionals, you need a modern property close to transport links and social amenities.
- Carefully choose a location. Is it close to where you live already, so you can manage the rental yourself? Is there are rental market? Are the amenities close-by? Will the area appeal to your target tenant?
- Calculate your rental yield—this the annual rental income against the value of the property.
- Don’t forget to factor in maintenance costs (such as recabling, TV aerial installation or repairs) the cost of no occupancy, and mortgage payments into your budget so you can plan ahead.
If you want to be a property developer, you need to embrace a slightly different mindset than if you were buying to rent. For starters, location is paramount here. As is finding the right seller—so keep them in mind when you’re sourcing potential properties. The aim is to make your money when you buy not when you sell. And, if you’re a cash house buyer, you can move more quickly to secure a deal or pick up a bargain at an auction.
#3 Property sourcing
Now, this is a bit different as you’re acting as an intermediary, so you’re not spending your own cash. Property sourcing involves finding properties with potential that you then sell on to investors charging a fee. There are lots of benefits to this approach—it’s a great way to make contacts, build skills in the housing market, you can do it without investing your own money and avoid some risks associated with starting your own business.
#4 Stay close to home
Let’s say you don’t have enough money to buy a property. If that’s the case, don’t hang up your business hat immediately. For instance, if you live in a large property already, but don’t need the extra space, you can rent out unused rooms and generate an additional income to supplement your main one or as part of a pension plan.
#5 Invest with others
No rule says you have to fly solo. Paying for a deposit or buying a property outright by yourself can both daunting and risky. Why not shoulder the responsibility with others and embark on a joint venture with other investors?
With more investors, someone else can help manage the portfolios and shoulder the financial responsibility. Also, by combining your resources, you can make your money go further and maximise profits.
#6 Last bits of advice
If you want to build a successful property business keep the following in mind:
- Be willing to play the waiting game.
- Diversify your portfolio.
- Learn to spot potential.
- Always look for ways to add value.
- Do your maths—become tax-efficient
#7 Don’t forget to have an exit strategy
And when you’re no longer an active investor, depending on whether you own your properties outright or have a mortgage —this will impact your tax responsibilities. Also, you can hold onto your portfolio, sell it, split it or restructure it. But, it’s always best to check with an advisor.
Need help to sell a property quickly?
As you’re likely aware, when it comes to the property market, things can change overnight. So, if for whatever reason, you find yourself in a position that you need to sell any of your houses quickly, companies like House Buy Fast can offer you a range of services to help you. For more information go here—https://housebuyfast.co.uk/