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My Top Tips For Property Investment
- Buy Low and Keep - History shows us that over a period of ten years property will double in price. Throughout history there have been numerous recessions and depressions but house prices have still risen. In the UK we live on an island where no new land is being created. The population is steadily growing and is currently around 60 million. There is already a shortage of housing and the recession has cut building back to negligible numbers of new houses being built. Demand for rental housing is at an all time high. So why sell? Why not keep your houses, let time do it's magic and increase values, and keep a steady income coming in from your rentals?
- Buy Used - I like to buy existing houses that need work. I look for a solid house with a good roof and four good exterior walls. The interior can then be renovated for a reasonable cost and the value of the property increased. When buying a house I look for the cheapest property in the street. Check house prices for the area and then put together a renovation budget. At the end of the day I am not looking to have the most expensive house in the street but to have the same value as other properties whilst still making a profit. For example, I bought a house for £70,000 in a street worth £115,000. It was a house that someone had started renovating but ran out of money and was selling as is. Most of the work had been done it just needed small finishing touches. My budget £1200 to finish. House was revalued at £115,000, remortgaged to 85% of new value and I walked away with a profit of £37,000 (cash in hand) for two weeks work. In addition I receive monthly income on my property from the rental.
- Remember it's a rental - When renovating remember this is a rental property. Magnolia walls look clean and give a spacious impression. White ceilings, skirting boards, doors etc. Keep bathrooms and kitchens simple. Buy a £200 bath suite instead of a £5,000 suite. Plain tiles around the bath instead of fancy tiles. Chrome taps instead of gold leaf finished taps. Present the house clean, tidy and looking fresh and new but don't spend a fortune doing it. Keep it simple and it will rent again and again.
- Check rental demand - I buy in an area with high rental demand. The bonus of this is that rents tend to be higher due to the demand. Don't panic and price yourself too low in the market. Remember, under UK law you can only increase rents once a year with a tenant in the property so you need to think ahead and make sure you have sufficient margins to cover any increases in rent that could occur until you can apply your next increase. The whole idea of rental properties is to make a profit not subsidise your tenants.
- Make sure you are legal - Over the past few years more and more regulations have come into force and it is very easy to be on the wrong side of the law. Make sure you keep yourself up to date from a reliable source such as a landlords association, landlord forums or your solicitor. Don't rely on your buddy down the road. Things to swat up on are Gas Safety; Tenancy Deposits; Energy Efficiency and Health and Saftety Ratings. All of which can have an impact on the legalities of your tenancy and your rights to evict tenants if needed.
For More information on Property Investment in General or Specific to the UK I recommend the following book:
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