How to invest in income property
How to invest in income property
The term income property relates to when you invest in a property to make money out of it. This may be by renting out to tenants who then pay you a monthly rental amount. Or, it could be a property that is bought for a low price, has improvements made to it, and then is is sold for a higher rate in the future.
It may seem straightforward to invest in an income property, but the truth is that it can often be more confusing and complicated than you realise.
To help you to work out what you need to do and the steps that you need to take. We have put together our guide on how to invest in an income property.
Research options
The first thing that you should do is to make sure that you take the time to research all the options that are open to you. You should never rush into buying a property, even if you think it might be the perfect one.
You want to ensure that you find an investment that is going to work out for you and that it is going to be a way to make money in the future. As well as what is going to be the right option for you.
For many the main source of income when it comes to property is a buy-to-let. However, you can also consider buying a property that can be sold, as well as buying a holiday or short-term rental property.
Consider your costs
You are also going to want to make sure that you can afford to buy a property in the first place. It isn’t just the mortgage (and deposit) That you are going to need to factor in paying out.
You are also going to need to consider:
- The fees that solicitors will charge
- The estate agency fees
- Land registry fees
- Any surveys that you need to pay out
- Additional fees for your mortgage
- Stamp duty
- Home Insurance
All of these costs can mount up, and you need to be able to make sure that you can afford them before you dive in.
Are there any risks?
Whilst most of the things to consider when investing in a property are positive things, there can be some issues and risks, just like any other form of investment.
The property market is in a tricky position at the moment, but it is still possible to get yourself involved.
You want to make sure that you understand how the housing market is changing and that the rental prices and yields can change over time too.
You also want to make sure that you are aware of the ongoing costs that may need to be paid when you have an investment property (more so than the ones we have mentioned above). These will largely be around the maintenance and repair of the property as well as paying out for the property management company (if you choose one) to manage the property that you are renting out with them.
It is worthwhile remembering that managing tenants can be tricky too, and you are going to need to be able to approach this somewhat sensitive part of the process with care.
Find a property
One of the key things that you need to do, is finding yourself the perfect property. This part can take time and you are going to want to make sure that you make the right choice. Try not to rush into picking a property for your investment, or else you may end up regretting your choice in the long term.
You want to consider what is going to be the most appealing to tenants and what is going to be a great property to manage too.
As you can see, there are a few different things to think about when it comes to investing in property. However, we can promise you that the care, time and research will be worth it in the long run.
