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Property has long been considered a good investment opportunity whether it is buying a property to let or purchasing a property to update and refurbish, many of us would like to invest in property. When entering into property investment it is important that you consider all aspects, property investment has many pitfalls for those entering into it for the first time.
Dangers of Property InvestmentHouse Prices can move in both directions
Although house prices often trend upwards, in history there have been many house price crashes where property values have dropped and the property market has become stagnant, the most recent occurrence of this is only going back a couple of years when mortgages become much more difficult to get, although house prices have begun to trend upwards again, there is no guarantee this will continue, any property purchase must consider the possibility of this and be able to deal with this.May not be able to find a tenant
If you are buying a property to let then you must consider the possibility of the house or flat lying empty, in the event of you not finding anyone to rent your property you will still have to pay the bills and any finance or mortgage you may have taken out to purchase the property.Property may cost more than expected to update
If you are buying a property to modernize and update to add value, then there may be hidden problems and costs, when buying a property it is always recommended to have a survey carried out by a professional, ensure you have all costings calculated before purchasing the property so that you have the total cost of the finished property calculated before buying it.Mortgage Rates may rise
When taking out finance to make your property investment it is important to fully understand your monthly repayments, if you are taking a longer term investment then it is important to note mortgage rates may go up over the term of the investment resulting in increased outgoings, when taking out a mortgage you are able to fix the mortgage rate for an initial period but at the end of that initial period (usually between 1 and 5 years) the mortgage rate may go up and you may have to remortgage which could also have additional costs (property valuations, legal fees, mortgage fees)
Ways of making money from property
Property gives you many opportunities to make money, popular property investments include having a portfolio of buy to let properties, another investment is purchasing a property to renovate, increasing the value of the property for when you sell it.
Buy To Let
Many people are buying properties to rent out, when buying a property it is important to ensure you are able to rent out the property, consider who is going to rent it and how much research the rental market in the area where you are considering buy the property. It is also important to consider not all tenant are perfect, while some may be a nightmare not paying there rent on time or not looking after your property, it is important that you carefully vet any tenant that you let your property to. Another important factor of being a property landlord is the tax implications, it is important you fully understand that the income from a rental property is taxable, it could be worth your while talking with an accountant to understand what exactly you have to pay.
There is also a legal aspect to being a landlord your property must meet safety guidelines and you are responsible for any maintenance the property may need.
If you have a good eye then buying a property to renovate can be a great investment, a house or flat in disrepair may put of many potential purchasers, resulting in a low purchase purchase price. Before buying the property however it is important you calculate how much it is going to cost to carry out the work to bring the property up to spec, remember you must sell the property for more than the cost of purchasing the property plus the renovation cost, you must also include any finance cost that you may occur.
If you are a property investor then it is important to have access to highly skilled tradesmen able to carry out electrical work, plumbing, building work or any other tasks that may be required, here at approved trader we can help you find tradesmen local to you able to help you carry out the work that is needed.