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Property Investment – Is it Good, Bad or Ugly?
Property Investment – Is it Good, Bad or Ugly?
Property investment is one of those topics that seems to be talked about constantly. Most of us know someone with a property success story. People with a good portfolio, built up over time, all set to retire to a sun drenched Costa without a care in the world.
Fantastic, where do I sign up?
But unfortunately we’ve also heard of the “buy to let horror stories”.
So is the real question…. “is property investment, a fast road to riches or a short cut to stress and misery?”
The short answer is it’s neither. Property investment is like most worthwhile things in life, rewarding when done well. But only if you take the time and care to get it right.
So what is important?
Location:
This may seem obvious, but location is King. Buying in the right place is hugely important if you want to ensure growth in value. This is key to a successful investment strategy. I would rather have a one bedroom flat on the river front in Docklands than a couple of three bedroom flats in Hull. The value of the Docklands property will always be more stable, and the prospect of capital growth is much more likely. These are important criteria for successful investing.
Forget the idea that you would never consider living in Central London, millions of other people do. So demand in specific locations will always be high. Infrastructure and communications links are important when considering investment. Proximity to the nearest train stations or motorway junctions are paramount.
Suitability:
It’s important to remember that you are not buying a home. Tenants have different priorities to owner occupiers. For example, gardens are not always attractive to tenants. “Will you be expecting me to mow that?” is a question I have often been asked, usually followed by “I’ll need you to supply a mower then, we haven’t got one”. However, new build flats with public areas maintained by service contractors can make excellent investments.
Letting & Management:
On completion you will be looking for good tenants who will pay the rent on time, keep your place nice, and won’t cause a nuisance. The four keys to this are:
- Referencing
- Inventory
- Inspection
- Planning
Referencing should always be done through a professional agency.
An inventory is essential, preferably a video inventory. If you do have a problem tenant, anything other than visual evidence is your word against theirs. Inspections and evidence are essential.
I once saw a rental property where a leaking washing machine went unrepaired for 18 months. The kitchen floor beneath the machine was non existent, it had just rotted away. Regular visits will avoid this sort of problem.
When signing an Assured Shorthold Tenancy Agreement as a landlord, consider the end date carefully. A six month agreement that starts in the second half of June will end near Christmas, not an easy time to find new tenants. This could result in a void period, and lost income.
Retaining a diligent managing agent will cut out stress and pay for itself over time.
The Ten Year Plan:
Once you have achieved your first successful investment, why stop? By continuing to leverage your equity it is possible to grow your portfolio. Early retirement then becomes an achievable option.
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About the author
Name: Mike Beckley of Midas Estates
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Website: http://www.midasestates.com
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