7 things you must consider when investing in property

Things that successful property investors always think about

If you are new to investing in property, when we meet for the first time we will discuss things like your lifestyle goals and financial situation. Together, we’ll build the best property investment strategy to achieve those goals within your financial means. Through our consultation, you’ll have a better feeling for property investment. You’ll also have a better understanding of these seven things you must consider before you invest in property.

1.      Set a suitable budget for your property investment

Like most property investors, you will probably need to borrow money to invest in property. Typically, you’ll need around 30% of the property’s value as a deposit. Borrowing to invest isn’t a bad thing. In fact, leveraging to invest in property lets you make money on other people’s money – and you can claim a tax deduction based upon your mortgage interest payments and personal tax position.

Remember, mortgage interest is not the only cost to account for when investing in property. Other costs include:

  • Stamp duty
  • Legal fees
  • Landlord insurance
  • Maintenance and repairs
  • Property management

(TIP: Many property investors start out by releasing equity from their own homes to act as a deposit on an investment property.)

2.      Understand that rental income may vary

If you buy in the best places to invest in property UK and buy an every person property (one that will be attractive to the most tenants), then you should secure good tenants who stay in your property for a long time. However, all tenants leave eventually. You will suffer void periods. So, your rental income may not be as smooth and consistent as you might wish it to be. During void periods, you will still have to pay the mortgage, utility bills, council taxes, etc. You should budget to have a reserve fund for void periods.

3.      Make sure you buy in the best places to invest in property UK

You’ll need to research where to buy. Today’s hotspot may be tomorrow’s dog (and vice versa). Consider:

  • The property fundamentals (shops, schools, transport links, major employers and major investment)
  • Average rental yields
  • Prices and your budget
  • The property itself
  • Any developments or infrastructure plans that could harm your investment property’s value (e.g. a motorway to be built through the back garden)

4.      Do you want to be a DIY landlord?

You may have a burning desire to buy property locally to you so that you can manage it yourself. In our experience, this very rarely (if ever) produces the best returns. More likely, the best investment property will be found some distance from where you live. You’ll need to decide who should manage your property. Whether you are self-managing, or you hire an investment property manager to do the work for you, here are some of the tasks that need to be done:

  • Vetting tenant applicants
  • Property inspections
  • Collection of rent
  • Maintenance and repairs
  • Handling complaints and evictions

5.      Keep on top of the law

The buy-to-let laws are constantly changing in the UK. If you flout them, you could be hit with a hefty fine, or get put on a rogue landlord list. Do you have the time to stay on top of landlord laws and regulations? This is another reason to use an investment property manager (make sure they have the capability to keep abreast of the rules and regs).

6.      Know the tax regime and your tax position

You will be liable to tax on your rental income and capital gains you make on your property investments. There are various ways you can minimise tax liabilities (for example, by investing in property as a limited company), and a range of deductions you can make before tax liability is calculated. These include:

  • Advertising and marketing costs
  • Cleaning, gardening, and maintenance
  • Travel undertook to inspect or maintain the property
  • Property management

You should also claim tax relief on the mortgage interest that you pay.

7.      Choose your property investment professional partners wisely

You will need a team of people around you when investing in property. People like solicitors, mortgage brokers, investment property managers, tradesmen and maintenance technicians, and so on. Choose them wisely, for they can make or break your investment.

Keeping these seven considerations in mind when you invest in property will ensure that you invest well. That’s why we make sure you think about them when we conduct our sleep test.

To join hundreds of other investors who we have helped to build successful property portfolios, get in touch with Gladfish today on +44 207 923 6100

Live with passion

Brett Alegre-Wood


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