How To Start Investing In Property
When looking for investment options, there are many choices where you can invest your money. Stocks, mutual funds, pensions or property. Buying and investing in a property for beginners is actually an investing strategy that is both satisfying and profitable. Unlike bond and stock investors, prospective real estate owners can use leverage to buy a property by paying half of the total cost upfront, then paying the other half balance and interest, overtime.
What makes investment in property a good move? A great investment has a high chance of success, or return on your investment. High risk investments generally have high returns. Even if you choose an investment option with a high probability of success, it is not a guarantee. You shouldn’t take a chance if you cannot afford to lose that money.
It is the start of the new year which for many will mean setting new goals and positive change to achieve success. Among your goals for 2023 could be to start investing in property. But where exactly do you start when you are a beginner? Our guide is especially designed for investing in property for beginners.
Property Investment for Beginners – Starting from Ground Zero
Investing in property can be a great way to build a new or passive income and create wealth. Property is one of the safest investment you can make, but every investment comes with a risk, it is crucial you carefully consider your options, including;
- How you will finance your property investment
- Other buy-to-let investment costs
- Stamp duty on buy to let properties
- Your future property investment goals
- Investment location and property type
How You Will Finance Your Property Investment
Think how you will pay for your first buy to let mortgages. If you are planning to get a buy to let mortgage, you will need a good amount in your hands. Most of these mortgages require a 25% deposit. That means for a property costing £300,000, for example, you’d need a deposit of £75,000.
Other Buy-To-Let Investment Costs
With your buy to let property’s purchase price, you also need to factor in:
- Survey costs
- Insurance costs
- Stamp duty
- Solicitors fees
Stamp Duty On Buy to Let Properties
Stamp duty guidelines for buy-to-let properties mean you’ll pay an additional 3% extra on top of regular stamp duty rates.
Your Future Property Investment Goals
What kind of property investor do you want to be and what are your future goals? Plan whether you want to build a property portfolio that could replace your current income or you are looking to make quick returns by flipping properties. Always think about long term goals you want to achieve through property investment, as this will help you keep focused.
Investment Location and Property Type
One of the crucial decisions; where to buy the property. Location is significant when it comes to buy to let properties.
You’ll need to think about:
- Property prices in your area
- Average rents
- Rental yields
- Potential regeneration in future years
- Transport links and employment in the area
As well as establishing a good investment location, you’ll also need to consider who your tenants will be.
If you’re ready to attract families, you should be looking at larger properties which could stretch your budget but could also secure you more monthly rent. HMOs can be profitable but are far more multifaceted than standard rental properties when it comes to legal and health and safety requirements.