If you’ve got your sights set on investing in property but you’re not sure how to start, then read on for a helping hand. Investing is a very popular option with more and more people want to get involved, but before you get started, you need to make sure that you do plenty of research so you know exactly what you’re doing. There’s both pros and cons to investing which is why We Buy Any Home have looked at some of the key things you should consider when wanting to invest in property.
Can I invest in property on my own?
When you invest in property, it’s a huge financial commitment, so knowing the options available to you will avoid you going in blind, helping you choose which is the most suitable path for you;
Moving forward as a sole investor:
When you invest for the first time, doing it alone can be daunting but give you control of everything and allow you to pocket the profit for yourself; however, it’s generally a more expensive option to start with, and you have to be in a strong position financially to cover all of the costs. You’ll also be entirely responsible for the investment, which means if something ends up going wrong, you need to be able to deal with the consequences. Sole investors tend to be more experienced, so it may not be the best move for first-timers, but this is a decision that you need to make yourself.
Investing with other partners:
A more popular decision for first-time investors wanting to get started is to move forward with other people, allowing you to share the costs and require less capital. This also means that you will share all of the responsibility and the risk with the other investors involved, reducing the risks and the stresses that can come from investing on your own.
What’s the best sort of property to invest in?
There are two main options available to you when you decide to invest in property:
Buy to let:
With this method, you can purchase property that you buy to be rented out to tenants. Your profit will come from the monthly rental payments, but it takes some time to see it.
Buy to sell:
This option allows for investors to purchase property that needs renovating or modernising to allow the potential to earn a profit when re-selling. This is a faster way to achieve a profit, but the risks that will come with it are completely different than those that come with buying to let, so you’ll need to know how to carry out the work on your own or be in a position to pay a professional to do so before you sell the property.
How long before I’m in profit?
Investing is a long process that requires a lot of patience. Although buying to sell is likely to provide you with a profit much quicker that buying to let, it is still a lengthy process. Ensure that you make a plan, focusing on when you expect to be in profit so you can be sure your efforts are paying off.
For buy to let investment opportunities, you’ll receive an estimated percentage when you’re looking at the property to provide you with your expected return each year. A higher yield is what you’re after, so research places that you’re interested in investing in and see what is the best opportunity available. Make sure that you don’t go into investing expecting to make a large amount of money instantly; it takes some time to see proper growth, but sticking with it will see that payoff.
How much will it cost me?
There’s no specific cost as to how much you need to start investing, but the starting-up funds that you need are the biggest reason that many first-time investors choose to work with other partners, as it makes things much easier when saving up the amount required to buy.
As investing in property is a high risk, it’s critical that you have enough money to still be financially okay regardless of the investment outcome. Another big risk to make note of is the chances of difficult tenants. An investor’s worst nightmare is when a tenant can no longer afford to pay their rent. Having extra funds set aside just in case this ever happens will give you peace of mind.
Is it a full-time or a part-time job?
Investing can be tailored to your personal situation but to start with, take the time to learn the ins and outs before committing to doing it full time. This will give you the security of a regular income rather than going all-in from the start, which is riskier.
Investing full-time is an option for many investors and can bring in an impressive sole income. Starting part-time and building your portfolio up is a great way for it to become your entire income.
Investing is a long-term commitment, so having all the information lined up ahead of time will help reduce risks and allow for success.