Essential Rules of Investing in Property

If you’re looking to add property investment to your portfolio then there are certain golden rules that apply even when the economic climate is as bad as the current one. Knowing these rules can ensure you build value in your investment even when the markets and general economy is in a downturn.

Because the economy is so bad, lenders are being even stricter in who they lend to and how much they lend and consequently it is essential that you get your property investing tactics exactly right. Firstly, always make sure that you do significant research with regards to the area you wish to invest in – look into the property values and the businesses, shops, schools and infrastructure of the area. What kind of businesses are there in the area? Does the area have a future? Are companies investing there? Next check the planning applications for the area – make sure there are no developments in the pipeline that might affect the value and tone of the neighbourhood.

Next calculate the total price of your investment – not just of the property but also of the additional things you may need to purchase and the services that you might have to pay for to get the house into tip top condition. Investing in good fixtures and fittings will pay dividends in terms of both getting high quality tenants and capital appreciation. Always make sure that you buy houses or properties that will give you a decent amount of capital appreciation. In addition, if you are renting the property out make sure that there are tenants ready to go from the first month onwards. At the same time, make sure you have funds available in case you need to wait for tenants or in case the tenants miss their payments for a month or two. Always remember that you could face lean months without rental so it is worth preparing for that rainy day.

Remember that investing in property is to invest in a long game. Profits wont come overnight but if you are prepared to be patient over a few years you will see a very good return on your money. Make sure you get a mortgage with an interest rate you know you can manage (and without any excessive charges in the small print) and which will be covered by the rental income.

Lastly, avoid any mortgages that are too good to be true or that might appear to loan you more than you can afford – do not overstretch, as this is what caused the credit crisis and the current economic downturn. Always make sure you put down at least ten percent on any property investment.

Alex is a financial writer and blogger. He writes about everything from credit cards to mortgages to how to set up an umbrella company.

Tags: Property Investment

Posted in Business Tips