Property investing is an amazing way to generate income, you can take a hands-on or hands-off approach depending on your needs and goals. For newbies, property investment can be a little scary. There’s a lot you need to learn before you get started. To get you started on your property investment journey, pay attention to these tips.
Decide on a method
The first step is to determine which property investment strategy you’ll use. There are essentially two property investment strategies; the first is flipping the property and the second is buying a rental property. In these two strategies there are numerous considerations that must be made.
Property Reversal
Property reversals are all the rage property investment strategy, so what precisely is flipping a property? Flipping involves buying a property, renovating it, and then selling it for a profit. Conceivably, you must be tight with your budget if you’re going to flip properties. Spending too much on renovations can easily compromise how much profit you’ll generate. By flipping properties, you can make quite a lot of money in no time.
Property Rental Investment
Property leasing is a lovely option for many new investors. You might choose a Single-Let property strategy or an HMO investment. Single-let properties are generally rented out to families or working professionals. You are renting out a home to an individual or a group (not individual renters). HMO investments are also called ‘house shares’. With house sharing, you rent out each room individually. HMO investments have higher earning potential, but you will have more admin and maintenance issues to deal with. For newbies, buy-to-let purchases are the simplest way to get into the property investment market.
Property Rental Investment Tips
- Property management company
If you decide to buy a buy-to-let property, the best advice is to invest in a property management company. So what precisely is a property management company do? A property management company takes care of each aspect of managing your property including marketing, repairs and maintenance, tenant complaints, admin and so on. Maybe you like the idea of earning money but you do not want to get entangled with the management side of things? If so, a property management company is definitely the way to go.
- Determine the risks
All investments come with some element of risk. It is important to determine the risks related to your investment, so that you can make wise choices. It can be helpful to see what the market predicts before you make your initial investment.
As the coronavirus pandemic continues, many are concerned about the impact it will have on the housing market. People wonder if now is still the right time to buy property. Nick Bailey, from Maximum Real Estate, indicates that there’s still significant demand for property. He stated that, ‘the population is increasing and the biggest age group, millennials, are in their peak home buying years so the demand side remains strong.’
- 3. Study the property market
Very helpful for studying property real estate market before you make any movement. Rental properties are currently in high demand in the US, meaning buy-to-rent is a wise investment. To help you find out about the property market, take a look at the following resources:
National Real Estate Investor Magazine: Here you’ll find lots of useful tips and trends related to the real estate market. Recent articles have included ‘How Apartment Tenants Forewords Changed Due to the Pandemic’ and ‘Strategies For Identifying Market Value.’
Realty 411 Magazine: This magazine has quite a lot of info on market trends, financial advice and much more. There are also lots of links to real estate themed webinars, to help you further educate yourself.
- Choose your tenant
You need to know the type of tenants you are targeting so you can purchase a property that fits their specific needs. Do you want to rent to a family? If so, you need to consider the schools in the area, the security of the neighborhood, and child-friendly amenities. Maybe instead you want to rent out to students? In this case, you should choose an area that’s inexpensive, crowded, and shut to a university.
- It’s all about location
Location is essential in the world of property investment. You should research which areas can offer you great results and begin from here. So which are currently the best buy-to-let environments in the US? Well, according Global Investment Areas such as Memphis, Detroit, and Ohio combined can offer you up to 35% returns.
- Get Owner’s Insurance
Landlord insurance is a kind of home insurance particularly for rental properties. In general, this includes at least one of the following types of coverage:
Insurance: Liability insurance can offer you legal protection if you end up going to court.
Building insurance: This type of insurance covers damage to building features or structures.
Content insurance: Contents insurance covers items inside the property from curtains to carpets and furniture.
Property Flipping Investment Tips
1 . How to add value
Property inversion relies on adding value to the property, and once you add value, you will see a greater ROI. So how can you add value to a property?
Extend living space: Expanding living space is among the easiest ways to add property value. You can do this by building a kitchen extension, building a garden office, adding a conservatory, or considering a loft or basement conversion. Each of these renovations can increase property value by up to 20%.
Kitchen renovation: Virgin Money shows that a new kitchen can add 6% to property value. These days our kitchen is as much a social space as it’s a functional space. We owe this to trends like kitchen islands (or double islands), and open living spaces!
Triple Glazing: Triple glazed windows increase safety and energy efficiency. It is suggested that you can add 10% value to the property with this window.
- Slow start
As a beginner, you will want to start slow, do not buy too many properties directly or you will get overwhelmed. Once you get the hang of it, you can expand your projects to create a diversified portfolio. For variety, buy a wide range of properties, and focus on different areas. A diversified portfolio like this can improve your cash flow and reduce your level of risk.
- Budget wisely
When you enter the property market, it is vital to budget wisely. Remember, unforeseen costs can arise so you need to be prepared for this. You need to set aside enough money to maintain your property regularly, keeping your tenants happy and safe. You should also budget for paying your property management company, and any taxes you will incur throughout the financial year.
- Avoid properties that require extensive work
When it is your first time flipping a property, it is best to avoid properties that require extensive work. Choose a property that needs minor repairs and has quite a lot of potential to add value (without a major investment). Properties that require too much maintenance can turn out to be way more trouble than they’re worth.
- Create your flip team
If you want to flip properties, you need an amazing flip team behind you! Your team will consist of a wide range of people including architects, contractors, real estate brokers, etc. You may have a flair for renovation, finance, or something else, but you will not be capable to pull it off everything! Building a talented team for yourself is the best way forward.
- Bring your contractor
It’s a wise move to find an amazing contractor before you make a buying decision. Then, take the contractor to view your property. Your contractor can provide advice on how much work the property needs, helping you make the right decision. They can provide an estimated timeframe for work and let you know if you need a permit.
- 70% Flip Rule.
The property fin has a 70% rule, but what does this mean? Well, the idea is that you should not pay more than 70% of the property’s value once it is repaired. For newbies, flipping properties can be risky, you’ll need support, otherwise you may prefer to invest in a buy-to-let first.
- Don’t forget taxes
When you reverse nature You should consider taxes as part of the process. For example, if you flip your property using a company, that company will be responsible for paying corporate taxes. Conversely, if you invest as an individual, the profits you make will be counted as part of your income tax. Corporation taxes are less than income taxes, so many investors set up firms to use for their property investments.
Starting a property investment is much easier when you’re ready and arranged. Take all the tips you can get your hands on and avoid taking too many risks as a beginner.
