If, like many other people, you have decided to invest in a property to rent out, there is indeed much to consider. As with any investment, there are risks and you are well advised to look into every aspect of the purchase before making any concrete decisions. The numerous costs involved include carrying out renovations on the property, not to mention the many legal responsibilities that come with being a property landlord, and if you have crunched the numbers and are prepared for a long-term investment, only then should you proceed. Here are just some of the factors you should take into account when purchasing a rental property.
✔ A Realistic Appraisal of Rental Prices
There are, of course, many factors that contribute to the rental of a property, such as location, size and the condition of the property. If you can find an established conveyancing lawyer, one that is experienced in buying rental homes, then they can help you to ascertain the rental amount. Look at the current real estate market in your location and you should also take into account the projections for the next 3 or 4 years. Once you have found a suitable property, you will need the help of a local firm of conveyancing solicitors, who will make sure that your investment is as it should be.
✔ Calculate Your Costs
Aside from the obvious price of the property, there are many other costs, such as legal fees, stamp duty and any renovations the property might need to make it habitable. One must also take into account property maintenance – the landlord is responsible for the building’s maintenance – and by enlisting the help of an established property management company, you can be sure that the property is well-maintained.
✔ Carry Out Thorough Research
The location of the property should be researched with a view to the current housing market. It might be, for example, that a major employer in the area is soon to relocate their factory, which would cause unemployment, which could have serious consequences for your investment. On the upside, there might be a new mass transport link coming to the area, and this could have a positive effect on the rental you can charge.
✔ Choose Investment Partners Carefully
If you don’t have the necessary capital to make the project work, you might be tempted to partner up with another investor, which is fine, providing you are sure that they are suitable. Discuss the project in detail and be absolutely sure that your partner has similar goals to you and is prepared for a long-term investment.
✔ Don’t Forget Taxes
When you buy a property with a view to renting it out, you will be liable to pay tax on your profits. It is a good idea to discuss this with a property lawyer, who might suggest setting up a company. If, for example, you are planning to increase your property investment portfolio at some point, then forming a company might offer taxation advantages.
Buying property with a view to renting it out is not something to rush into, and only when you have crunched the numbers and are in a position to see it through, should you make any firm commitments.
Subscribe to Blog via Email
Want to know more? Here’s a related article: Is it Worth It? 5 Things we Learned About Real Estate Hunting