You’ve heard the stories, and probably seen them play out on TV series as well: there are ways to make money from property. For every good news story you hear about, though, there are those that end badly – and, while you like the idea of trying your hand at property investment, you don’t want to end up regretting it.
There are some things you need to look at and put in order before you delve into this type of investment opportunity. These thinking points may help you to decide whether you want to go ahead and build a property portfolio.
How can I get money from property?
There are two ways you can make a return on property:
- Rental – where you earn money by letting out your property to tenants
- Sell for a profit – you buy a property and then sell it for a higher price
Since housing prices and rental rates can rise and fall, you should consider property investment as a long-term option. Even if you are looking to buy a property and put it up for sale again fairly soon afterwards, it can take a while for it to sell.
It’s best to do your research before you buy somewhere for profit and to diversify your portfolio with different kinds of investments. Lord Sugar makes money from property, so there’s no reason why you can’t follow in his footsteps.
How do I get the money to invest?
You will need some capital to start investing, even for a buy-to-let mortgage. Don’t worry, as there are ways around this – for instance, you can save aggressively to get the money you need. Begin with tracking your spending, then see where you can reduce that as much as you can.
You could also cancel memberships, earn cash from a side business, or set up a monthly transfer into a savings account. You may also want to consider renting out a room in your own home or borrowing against your current property.
Where should I buy?
This is where your research comes in, as it’s best to stay ahead of the game and track trends in local planning approvals. Improved rail links can increase housing prices, so it is one way of finding somewhere that will benefit from these updates.
In the UK, it’s also wise to keep an eye on developments from stores such as Waitrose – properties will go up in price once one of these opens in an area. You should also exploit your local knowledge, as you will then have inside information about transport links and schools – and so it will be easier to help your future tenants.
I want to renovate rather than rent – what work should I do?
The main thing is to not get carried away. Aim to get the worst house on the best street you can afford, as this gives you great scope to add value. Concentrate on essentials, such as ensuring the property is damp-free, roof work is completed, and any rewiring is done before decorating. However, you should fix superficial defects such as loose tiles, cracks or mouldy sealant, as this will put off buyers.