Investing in property has become a very popular option for people across the world, and it’s got some incredible advantages; the extra income being one of the most attractive benefits. However, if you’re thinking about getting involved and investing in property, you need to know much more than just the positives that can come from it. We Buy Any House have put together some questions you should ask before moving forward to ensure you’re making the right decision.
Can I Invest in a Property by Myself?
Investing is a big commitment, and one that shouldn’t be taken lightly. There are a few different options that you can look into, depending on your situation and how you want to approach it –
- A sole investor:
Investing in property on your own will mean that you take away 100% of the profits, but it also means that you’ve got to be able to afford to do this, and that you’re able to be responsible for any issues that arise. Sole investors generally have more experience, so it isn’t always the best step for a first-time investor, but there are exceptions. - Investing with partners:
This is a more common way for first-time investors to get up and running, as it requires less capital upfront and allows you to share the responsibilities with the other partners, making it less stressful and less risky.
How Will I Be Able to Finance a Home Investment?
The financial aspect is often why investors like to start out with partners, as it makes raising the funds much easier. Depending on your situation, if you’re able to afford to finance your investment on your own then you can move forward, but remember that you’ll also need money available if something goes wrong. Investing in property comes with the risk of damage and emergencies that you’ll need to be able to pay for, as well as the potential risk of nightmare tenants that could result in losing out on rental payments. You should always have more funds as a back-up if needed and not approach investing with the mindset that you’ll instantly get money back, as you’ll likely be disappointed.
Is It Possible to Be a Part Time Investor?
Again, this will depend on your circumstances, but you’ll need to decide how you want to approach getting involved in investing. Part-time investors will have another source of income, so they aren’t completely reliant on their investment to fund them, whereas full-time investors rely on their full income coming from their investments. It can be a risky move going full-time, which is why a lot of investors start part-time and have another income to keep themselves supported.
Where do I start?
If you’re looking into investing in property and you’ve got the funds to do so, the first thing that you need to do is decide where you want to invest. You might choose to invest in the area you live in as you know the place well, and it’s often a comfort to be close to the properties so you could get there quickly if you needed to.
Other investors, however, will choose a new area to invest in based off the statistics in that area, especially those investing in student properties. Depending on the funding that you’ve got behind you, you may only be able to afford to invest in certain areas and have to avoid the main cities that cost more, like in the Southeast.
For investors that are buying property in locations that they don’t live, you’ve got another decision to make; are you happy to travel to and from the property when needed, or do you want to get an agent that’s local to deal with it? This will add another cost to your investment, but the peace of mind that it provides often makes it worth it, especially as you can instruct your agent to source tenants as well, saving you more work.
How long will it take to see a profit?
Investing needs to have a business plan in place, so you should know how long you’ll need to rent the property before you see a profit. Most of the time when you invest, you’ll be told that there’s a certain percentage of return each year, letting you work out how long it will take. The higher the rental yield, the better, so do your research and look at various options to see which is going to be the best for you, but don’t expect to see a profit straight away. Investing is a long-term commitment, so you need to know from the start that it takes time to see growth.
What kind of property should I invest in?
There are different ways that you can invest in property, depending on what suits you –
- Buy to let:
Investors will buy a property that is able to be rented out, and make an income from the tenants’ payments
- Buy to sell:
Investors will buy a run-down, generally damaged property and renovate it, raising the value and selling it on to make a profit.
Either option is a strong way to invest but will depend on your finances, knowledge, and commitment. Buying to let is considered an easier way but doesn’t offer the fast profit that buying to sell can, but you will need to either be able to do the work yourself or know professionals that can help to pull off buying to sell, making it a riskier option that isn’t suitable for everyone.
If you’ve been thinking about investing, make sure that you do your research, know how you want to invest, and most importantly, that you can afford to do so.
