Investing in buy-to-lets and student accommodation is big business at the moment. People are turning to property investments in their droves as a way of boosting their income and in response to the recent pension reforms, many pensioners are entering the property investment market to increase their retirement funds and get better returns than their pensions can offer. The fact is that over the last few years, property investment has continually outperformed traditional investments such as bonds, equities and ISAs and this is proving to be an attractive proposition for new investors.
The property market is currently booming so if you’re new to property investing and are looking for some advice on how to get started then here’s some top tips to put you on the right track:
Do your research – investment opportunities are wide and varied in the property market. There’s buying off-plan, student properties, traditional buy-to-lets, overseas property investments, HMOs and renovation projects to mention just a few. All of them will present good opportunities for high yields and they will all have certain elements of risk that you need to consider. Do your research, check out the various properties that are on the market, and decide what suits you and your attitude to risk best. It makes sense to have clear objectives when you’re entering the property market for the first time so whether you’re looking for rental income, capital growth or both, work out what’s important to you.
Location – we’ve heard it said time and time again that location is everything when it comes to property and it’s absolutely true. The better the location, the better chance of a good return so don’t restrict yourself to your own immediate geography. Many first time investors do this and they miss out on some great opportunities that are out there. For example, there are some great investment opportunities in some of the UK’s university towns and cities currently. The buy-to-let and student property market is booming in cities such as Birmingham, Manchester and Bristol and there are some high yield rental opportunities around if you know where to look. If you work with a good management agent it doesn’t matter where the property is located, so spread your net!
Who are you targeting? – when you invest in property, be clear about who that property is targeting. First time investors can sometimes enter the market without giving this full consideration. A typical scenario is a so-called bargain being picked up at an auction and then having to spend a lot more than expected to make it fit for living in. Renovation takes a long time and that is time when you’re not earning rent. You should also remember that every area has a ceiling price so it doesn’t matter how much money you lavish on a property refurbishment, it will only reach a certain price when on the market. That price may be lower than you anticipated. It pays to understand who you are targeting, whether that’s families, students or young professionals, and making sure that your investment ticks the boxes of what that target group want.
Get good advice – whilst it may be tempting to have a crack at the property market on your own and not pay out fees; that can be a very risky strategy. If you’re a first time investor you need to be clear about what your budget is, get some financial advice about the tax implications of making an investment and shop around for good property investment agency who can you guide you through the process. Once you’ve made an investment then working with a good property management company will help alleviate a lot of the stress that can come with being a first time landlord. Finding tenants, collecting rents, dealing with maintenance issues and handling complaints is hassle you can do without. Working with a property management company is often worth the fee, and it allows you the time and head space to think about your next investment.
For more advice about investing for the first time then please contact us now. We’d be happy to guide you through the process.