Monday 6 May 2019

Clear Signs You Are Ready To Invest In Property

Collaborative Post

As you all know I'm a bit addicted to the Rightmove scroll! Lately, though the reason for this has changed a little. Yes, I'd love to move to a bigger house but we've decided that if we do move it has to be THE move to the home of dreams. The reason that I continue to scroll is we are seriously considering buying a property to rent out. 

This will be what I deem a super grown-up move for us, but I already know from my previous employment within the housing sector that taking on an investment property is not something to be done lightly.

Small outline of a house next to piles of silver coins, and a jar of coins with a plant growing out of it

Have you considered investing in property but unsure on whether you’re ready? While there are many advantages of property investment, you can only benefit if you invest in the right circumstances. To help you establish if you’re ready to invest, read on to find out if you’re in a position to achieve success in the property market.

Your goals are set
Before making any sort of investment, it is essential that you establish both your short and long-term goals, although the latter is more important when investing. This is because purchasing property is a massive investment to make, therefore, you should not invest if you’re aiming to retain fast cash. Now, this doesn’t mean you won’t gain fast profits, as you definitely will. However, instead of looking at property as a fast financial solution, it should be used as a long-term strategy for buying your dream home or using the capital to enjoy a comfortable retirement.

When investing you need to establish where you want to invest, which should be a location with high rental yields that will provide you with substantial returns. To help you find a profitable property, you should seek help from property experts like RW Invest. They will offer their professional advice while also giving you access to the most lucrative properties in the north-west.

You have significant savings
Let’s face it; if you don’t have a sufficient amount of capital saved up, there is no way that you can afford to purchase a property and maintain it. You may not realise that there are several expenses associated with buy to let investment in particular. So, if you do have savings in place, you should work out whether you can afford to invest. To start, you need to figure out your cap rate, which is calculated using your estimated monthly rental income, the property price, and associated expenses.  This will allow you to establish your potential returns, and if this works financially, then you should definitely consider investing.

If you’re determined to invest in property but not great at saving, there are a number of steps you can take. For example, you could open a savings account, which should be left alone to generate interest. The longer it is left, the more capital you will gain, so you should set yourself a short-term goal to input a specific amount every month out of your wages, which should allow you to achieve your long-term property goals.

Piles of silver coins next to a jar of coins with a plant growing out of it

You have paid off high-interest debt
When investing, you want to make sure that there is no risk associated with your purchase, so if all your high-interest debt like credit cards or credit lines are paid off, you can invest right away. If not, you should consider paying off as much debt as you can, especially for debt with interest rates over 7%.

If possible, you should also consider paying off lower forms of debt such as car loans, mortgages, and student debt. Although these hold lower interest rates, it is best to reduce as much risk as possible. You should also make sure that you have a relatively good credit rating when investing, although it does not have to perfect, as this will allow you to receive efficient financing.

You can take on landlord responsibilities
If you’re retired or planning to come out of full-time employment, becoming a landlord is a great way to gain a significant amount of income. You can choose to take on full-time landlord responsibilities, which is only advised if you have no other commitments. This is because being a landlord can take up a lot of your time, especially if you take on a hands-on investment. This includes managing the property, taking rent, dealing with tenant queries, and even conducting regular maintenance.

You can also take a hands-off approach if you’re still working, although this means you need to employ a property manager or qualified company to ensure your investment is running smoothly. You could decide to give them all the responsibility, or just some of it. For instance, you could choose to take on the money side of the investment while they deal with the day to day operations.

For us, we're currently in the savings stage, how about you?

Mummy Snowy Owl

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