Are you looking to invest in UK property?
Are you looking to invest in UK property?
As house prices in the UK have reduced over the last3 years and 2011 predicted to besteady is it a nowa good time to start to invest in uk property.
In the past 10 years or so Pensions were out of the window and property investmentwas in.Then 2007 and overnight theproperty market crashed. Landlords withthousands of pounds equity in theirinvestments saw these gainswiped out and even worse was to come forinvestors comingin at the top of the marketwhoe were now sitting in negative equity.Clever landlords who took outtracker mortgages would see their mortgage payments drop dramatically.
Back then buy to let investors were the rocket fuel that flamed the housing market. Before 2000 only the those in the knowbought intoproperty but alots ofTV shows like Homes under the Hammer and property ladder that were showingthe man on the streetmaking thousands of pounds brought property investing to the masses.
So ifnow a great time to invest in UKproperty?
Demand for rental propreties has never been so highin the UK with good qualityflats and housestaking weeks to rent out.Here aretips to make sure you get your investment right:-
Do your sums
Estate Agentscan spot thebeginner a mile away. Recently we had an investor look at a 2 bedroom flat. She had 150,000 cash to buy, she was looking to pay 145,000 for a property with a rental valuation of 600 per calendar month (pcm). When I found out she was a cash buyer I suggested that she bought two properties one at 60,000 with a rental of 350 pcm and another at 80,000 with a rental of 500pcm. Two reasons, being a numbers person I would rather collect 850 pcm from two properties than 600 from one (an extra 3000 per annum) plus you spread the risk if the tenant fails to pay. She naively bought the 145,000 property because she liked it. See next section.
Don't just buy because you like it
Ok you must like a property to actually buy it but remember you will not be living in the property. Chose a property in an area that actually has rental demand. Buying because a property is cheap can have devastating effect when it comes to re-selling. Before you buy to let, ask a letting agent where to buy not an estate agent. An estate agent will tell you all property will be a good rental property because they want a sale. A letting agent will actually tell you which type of property is letting.
Insure Insure Insure
There are2 main types of insurance for landlords, property insurance thatlooks after the building and contestand rental insurance. The first is self explanatory, building insurance is a must and you should always take a minimum of say 6000 contents on top (even if you let unfurnished) and you can always take policies like malicious damage to cover the worst case scenarios.This will cost morethan your normal household policy and you must advise the insurance company that the insurance is for an investment property, or they won't pay out in the event of a claim. The other insurance which is often not takenby landlords is rental guarantee insurance. For about 16 a month insurance companies will pay the rent should the tenantdefault.Normally they vet the tenant first. For such alow cost we strongly advise.
Haggle
You have indentified an area and you have seen a few properties for sale and want to buy one of them, time to haggle. As an investor you have the same power as a first time buyer and estate agents will love you. Start low and be prepared to walk away if the seller does not budge. Let the estate agent know that you are interested in other properties but prefer their property. They don't want to lose a sale. Remember in Scotland to be offering about 10% under the home report Valuation.
Hand on or Hands off?
You should run any property investment like a business. Do you have the time to spend looking after the property and collect the rent. Or do you outsource this work to a letting agent. Letting agents will take about 12% of your rent per month, so build this into your figures. If it is a fairly new property and not much will go wrong with the property consider managing the whole thing yourself. An older property generally means things go wrong more often and you may want to use an agent. Plus a letting agent will provide referencing and back ground checks on any potential tenant.
Put 100,000 in the bank today and get 3% a return of 3000 or buy a property for 100,000 and get 6000 in rental returns doubling your return to 6%, so looks good on paper. Haggle the original price down and you may be sitting on a few thousand pounds of equity built in. Buy in the right location at the right price and 2011 may see the return of investors, if you can get a mortgage that is.
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