Investing in property is a huge decision. It also requires a large amount of capital; however, when done right, it can be a lucrative decision. Here are five things to consider before buying an investment property.
Location is still a major factor when it comes to property, regardless of its condition. Buying a good property in a bad location is unlikely to be a good investment. Proximity to amenities, shops, the view, transport links, schools – these are all big considerations for buyers. A good location will make it much easier to sell or rent your investment property, so make sure you familiarise yourself with the area in which you plan to buy.
2. Get to know the property and its value
Make sure you obtain a valuation before your buy an investment property, which will tell you what your potential investment property is worth. Get to know the numbers and the market in the area. A property valuation will help to determine other factors, such as a rental price, mortgage cost, taxes and fees. An RICS surveyor with expert knowledge of the area, perhaps sourced through a concierge conveyancing service such as https://www.samconveyancing.co.uk/Homebuyers-Survey/home-buyers-survey-manchester, can help. The surveyor will complete a thorough survey of a property in an area they know well, such as a home buyers survey Manchester.
3. Know what you want to do with the property
Have a clear plan outlined for what you plan to do with your investment property; for example, will it be a buy to let and do you have plans to sell it at a profit in the future? Make sure you know what you want to do before you purchase.
4. Have a good credit score
Your credit score will help to determine how much a mortgage company is willing to lend you, so a high credit score is extremely beneficial here. You can increase your credit score by paying your bills on time, keeping unused credit cards open, and reducing existing debts before taking on new ones. In 2010, an agreement between the Department for Business and the credit industry made it easier for consumers to access their credit reports.
5. Anticipate and assess the risks
Make sure you are aware of any significant risks and scenarios that could arise, such as unexpected repairs, economic factors, bad tenants and property taxes. Some factors you may have no control over, while others require good property management skills. Ask yourself whether you can handle being a landlord and are comfortable taking on such a responsibility.
Buying an investment property demands careful consideration and preparation beforehand; however, if done well, it can yield great returns.