One person’s profitable property strategy may be another’s downfall. A HMO hands-on investment, for instance, is better left to the experienced landlord, preferably one who has already cut his or her teeth on traditional buy to let and has lots of free time.
Buying renovation properties at auction, then selling them on is also a strategy best left for the ‘long in the tooth’ investor. But there are plenty of other means of starting out in property that isn’t too time-consuming and are actually pretty risk-averse. Read on and you’ll find out what they are.
First though, when starting out, there are definitely roads you’ll need to avoid, like the following:
Common mistakes to avoid
Buying the best property you can afford can be tempting, but it’s best to aim for the middle of the market until you really know what you’re doing. That means investing in a property that doesn’t need a lot doing to it, but is pretty basic too. Talking of basic, keep the décor for your buy to let neutral, so that your tenants can put their own stamp on it. You’ll get it rented out quicker.
Don’t do it alone
Property investing should be a sociable undertaking. You’ll want to network with estate agents, solicitors and other investors. Attend networking meetups, find out what’s happening in your local area, read council planning minutes to find out what’s happening regeneration-wise, join online property forums and continue to educate yourself in the subject for as long as you remain an active investor.
Acquiring social housing tenants is a good strategy for someone just starting out in property. It’s good because it’s similar to a buy to let i.e. you buy a property and rent it out to tenants – only with the council (or housing association) the rental is higher and it’s more secure. With regards to the latter, it’s because the rent can be paid directly into your account.
Another bonus with social housing tenants is that you can look forward to a good two-year rental at least (which is the minimum length of most council leases). At the end of that social housing tenancy, the council will ensure your property is in as good a condition as when they first acquired it. The only downside really is that while it’s leased by the council you can’t do anything with it i.e. sell it on.
Tips & tricks
Always plan before you buy
Work out who your ideal tenant is, what he/she does for a living, how much they’d be prepared to pay in rent and where they’d like to live. Then go look for a rental property.
Be prepared to go into debt
In order to benefit from the gearing up strategies that investing in property can bring about, you can’t be squeamish about debt. And anyway, who can afford to buy a house outright? Property is often described as ‘good debt’, because you’ll benefit from capital appreciation over time. In other words, unlike say, a car, the value of property accrues rather than depreciates.
Get in touch with your local property expert.