At times when the market is buoyant don’t settle for 2nd best in terms of the location of a property. I am not suggesting you only look for the best streets or areas but you need to make sure that the location of the property is right for you and is reflected in the price you pay. A house next to a pub or a take away might put off potential tenants and when the market is tougher it will always make the place more difficult to sell.
4) Yield – work out the yield on the property based upon the rent you are confident about getting. Don’t rely on what the agent selling the property tells you as they want their sales commission. Do your own research and be confident about the rental value of your property. The basic calculation is to work out the annual rent received as a percentage of the purchase price. For example, a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield. This should be taken with caution as this is the gross yield and does not include all your purchase and ongoing costs. Also be aware that your deposit value will change as the market fluctuates whereas the amount you owe on the mortgage will not be affected in the same way.
6) Resale potential – with our clients this is something we always consider. If your house is the worst one on the street or there is something that might put buyers off if the market is stagnant the property won’t sell easily. It’s easy to consider the here and now but always be mindful that if you do need to sell in the future that you’ve given yourself the best chance of doing so!
7) Buy right – this refers back to the points raised above but most importantly you should not rely on the market to rise to maintain your investment. You must buy at the right price. With all the fees to pay as soon as you complete you are behind if you pay too much for a property. Negotiate well and walk away if the deal doesn’t stack up or you will regret it later.
I hope this gives a flavour of the key points when purchasing an investment property. If you would like any further information then please give me a call on 01304 825153 or email firstname.lastname@example.org.