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Predictions that these changes would stimulate the buy-to-let market certainly seem to be coming true so far – pensioners are choosing to invest in property rather an annuity or stocks and shares, taking advantage of low mortgage rates and the rising number of buy-to-let mortgage products available to first time landlords. Lots of people have or are looking to take advantage of these circumstances and see the long-term advantages of buying property. A recent survey by The Office for National Statistics found that 42% of households considered property to be the secret to creating the largest possible retirement fund, up from 32% in 2010.
If you’re thinking about following suit, here are my eight tips to consider before you invest your hard-earned pension in property:
It is very important to have a firm grasp on your finances before you decide to invest in property. Investing isn’t for everyone, so make sure you do your research, read books, blogs and websites and speak to professionals and experts to gain a thorough understanding of what property investment entails. Make sure you understand your tax position in relation to owning a second property and including income from it in your tax return. Also consider this asset in the event of your death – do you want it to be passed on to your next of kin and how will it be dealt with in your will?
If you have plenty of time on your hands for a project, you might prefer to fix and ‘flip’ a house, or you might want long-term stability by investing in single-family rentals. You could also opt for an HMO – house of multiple occupation – which is great for the student rental market. Each property comes with its own risks and rewards, so check your figures carefully.
A brand new home is often more appealing to tenants as they are purpose built to meet their needs with brand new interiors and appliances, which also means little maintenance for you as landlord.
You will need to think carefully about the pros and the cons of buying in any particular area. Choose somewhere close to good transport links, amenities and schools to make it attractive to potential tenants. Buying a property in a regeneration area can be a great long-term investment. Remember, whatever you choose you won’t be living in this property, keep your tenants in mind at all times.
It’s important to have a detailed understanding of your cash flow before you start property hunting. Ensure you take all ongoing costs into consideration when budgeting – insurance, general repairs and maintenance need to be covered, as well as any agents’ fees and on certain developments management company fees too and also don’t forget any finance fees you have from additional borrowing.
Be smart and realistic when choosing your home, what appears to be a stunning exterior could be a nightmare in other areas. Make sure you get a full survey and talk to local agents about the market for renting or buying, so you know which is your best option, depending on what your goals are.
You can find them on local authorities’ websites and they help give an indication of areas with good long-term investment potential.
Think about how much involvement you want as a landlord, whether you will use a lettings agent to find tenants and manage the property and research their costs versus the profit you are making on the rent. Make sure you understand your legal position as a landlord and the responsibilities you have to your tenants.
So if you are seriously thinking of investing in property, there are some attractive yields available and we can help to make it a smooth process. For more information visit the Investor page on our website.
Here you’ll find property related blog articles from the team at Countryside as well as independent experts. Expect regular tips and advice on topics such as buying a new home, interior and landscape design, setting up home, mortgages and finance, plus articles on architecture, the property market, regeneration and more.