Property Investment – Where to Start

What is Property Investment?

Property investment is as its name states, purchasing a property with the intent of making a return on investment and a profit either through rental income or resale of the property. The investment can either be long-term or short-term, depending on your aim with the property. Short-term investments usually involve flipping of the property; the property is purchased, remodeled, or renovated, and sold for a profit after a short period of time.

An investment property is a property that is not used as a primary residence and generates some form of income for the landlord, that falls outside of their usual line of business. There are three types of investment properties: residential, commercial, or mixed-use.

  • Residential: Residential property investment is a popular and great way to supplement income. Investors will rent out their residential properties to tenants and will collect monthly rents from the occupants.
  • Commercial: Investors do purchase not only residential properties but also commercial. These investors – mostly corporations – purchase commercial properties that are specifically for business use. Differently to residential, the maintenance of these properties come at a higher price, although, the return on investment and profit is made through the high rent fees.
  • Mixed-use: Differently, a property can be used for both commercial and residential. For example, the ground floor can be home to a retail shop or restaurant, whereas the upstairs part of the building is residential flats. This is another way for investors to create a return on investment and profit on their investment properties.

Property investment is a big business, and if done right, can be highly lucrative.

Is Property a Good Investment

2020 has proven to be a difficult year, with Brexit and Coronavirus having massive impacts on the UK economy. However, the property sector remained stable throughout the pandemic and economic crisis. In March 2020, the stock market crashed between 25%-30% while the property market remained relatively strong. With unprecedented times, the property market has proven that investing in property is a stable investment.

Another reason as to why it is indicated that property is still a good investment is because of the need for rental accommodation. In the current climate, a lot of families cannot afford to buy outright, with the confirmed recession and the pandemic still very much present, renting properties is proving to be a stable sector all around. Following this, tenants are showing increasing trends in opting for longer-term rentals, at a minimum of five years. If you are prepared to invest in longer-term property investments, investing in property is as strong as it has ever been.

Shorter-term property investment can still be just as profitable, however, for first-time buyers, it is proving to be more beneficial to buy a brand-new property, as the government is offering help with these properties. If you are looking to invest in a property to flip, it is worth looking into the current house prices around the properties area, and some of the benefits to the property, what are the schools around the area, sightseeing, etc.

How to Get into Property Investment

If you are thinking about investing in property you will need to know how to get into property investment. There are a few things to do before you think about purchasing a property for investment purposes.

1.       Why do you want to invest in property?

Property investment is still considered to be one of the best investment revenues, however, you must know why you want to invest in property. What is your goal for investing? Is it a side income, or something you are looking at doing full-time? You must understand your own motives before looking into the property market and understand how much time and money you can give to this investment.

2.      Get Financial Advice

Property investment is a big investment and not something that should be taken lightly. You need to have a budget in mind for your project, whether you are flipping the property or renting to tenants, having a budget is important. Getting professional financial advice for your future property investment will help you to understand how much you can afford to dedicate to this project.

3.      Do property market research

Knowing the market is important, you want to be attractive to potential buyers and tenants, and not putting yourself out of budget for these people. Research the property market in the desired area, along with area research. Make sure you keep an eye on all the trends within the sector and current affairs, such as Brexit and Coronavirus, are affecting the property market.

Can Estate Agents Help

Estate agents can help when it comes to property investments. The good thing about having an estate agent involved in the sale of the investment property is that they know everything about the property. Once you have outlined the properties you are interested in viewing, have the estate agent take you around and ask all the questions you need to know, such as how much work will be involved in renovating/fixing the property.

Cairds are specialist estate agents in Epsom, Ashtead, and surrounding areas. For all property information, please contact us.