Property is a popular investment as it offers a chance of a decent return. Because after all, people will always need somewhere to live.
Though it's not always plain sailing, for as we know house prices can fluctuate - as well as rental incomes and mortgage interest rates. But these things haven't put us off - if you look around the country today there is still a great desire to own property. Here are five tips for those looking to own an investment property:
Arrange a Contract
Even when budgets are tight, try not to cut corners on things like contracts as things can become hostile. A landlord who has an informal tenancy agreement with a friend or colleague for example can soon find themselves in a sticky situation if things don't go to plan. Our expert solicitors can advise you clearly on this type of problem.
Mortgages: Play Your Cards Right
Trying to pay off your mortgage early is a great idea which can only benefit you in the future, however it's important to remember not to bite off more than you can chew. Reduced term mortgages are popular but they can get you into trouble if interest rates rise dramatically or you property lies empty for a while. Check with your mortgage provider what options you have.
Have an Emergency Fund
Investment properties will need to be adequately maintained in order to protect your returns. Landlords should have money set aside for essential maintenance, as well as any larger repairs. This money may also come in handy paying the mortgage if there is a gap between tenants.
Consider an Agency
Managing your investment property may be a job that you feel you can do yourself, yet it is worth considerning an agency - particularly if you plan to purchase more than one property. While agencies charge a fee, they will help you to find tenants and they will also perform background checks to ensure you don't end up inadvertently housing Hannibal Lecter. They will also be able to deal with midnight call-outs, making sure you get a good night's sleep.
Make sure that you have insurance. The last thing you need is to owe the bank a mortgage for a property that's been destroyed by fire or flooding.
(adapted from savvyscot.com)
(image: Ines Hegedus-Garcia/FlickrCC)