A typically long-term investment venture, in a tactile, stable asset, real estate and property investment is a popular strategy adopted by many savvy investors and entrepreneurs. Not only can it be a lucrative venture, even paying regular dividends if purchased for buy to let purposes, but a property can also form a financial bolster and backbone for any successful, diverse investment portfolio.
While the benefits of a successful property venture are plentiful, however, there are risks involved, and pitfalls you can fall into if not doing the proper research. For those interested, here are some important factors to keep in mind when investing in property.
1. Property Type
There are a variety of different property types that you can invest your capital in, each with their own pros and cons. These include HMO’s, student accommodation, and even retirement home investment. Do some research on the different types available within your price range and try to think about what might suit your lifestyle the most.
Student accommodation, as an example, is extremely popular in city centres, with a growing number of young people looking to move into city centres while studying at university and then going on to live and work there after graduating. This makes the tenant demand high, which helps with void periods for investors looking to make regular rental income.
2. The Costs and Commitments Involved
It will obviously vary depending on the type, size, and quality of the property that you’re purchasing, but a real estate investment typically requires an advanced level of capital. Before going ahead and committing your savings to an investment that is long-term, think about the existing financial commitments that you have, and allocate a monetary cushion so that you’re protected in the event of an unforeseen or emergency payment.
Your decision on property type might depend on the amount of time you have available to commit to factors such as maintenance and support for tenants (tending to ongoing issues and making sure the apartment/home runs smoothly), and if this is the case, you might want to think about a hands-off strategy. If you invest in a central apartment with an assigned management company, for instance, this may allow you to focus on your career or main projects while your strategy is handled on your behalf by a dedicated team.
3. Selecting the Right Area
Buying a property in the right location is an absolutely crucial decision when investing. Not only do you need to find an area with popularity and promise, but you also need to think about whether or not the area is projected to be successful in years to come. RWinvest, an award-winning UK property company with offices around the country, recommend North West cities such as Liverpool and Manchester as some of the best areas in terms of surrounding regeneration, house price growth, and also affordability when compared to more established investment areas like London.
When choosing an area for investment, some become attached to an area that they know well. Sure, an investment in an area local to you that you know well could have its benefits, but if a different, similar city is offering larger growth potential and is more in-demand, sometimes it is better to detach yourself personally and treat the property as a business.