Building up a property portfolio is something that many of us would like to do. However, it is a process that takes a great deal of time, hard work and commitment. A property portfolio can generate a healthy second income, while the marketplace seems to be growing all the time. There are nine million renters in Britain, and one in five renters is a family. Before you get carried away with dreams of your property empire, it is worth making a few important considerations first.
Treat It A Business
The first thing that you would do before starting any business is carefully do your sums, and this is exactly the same when it comes to investing in property. You will need a substantial amount of cash before you can even think about getting rental property. A deposit of around 25 percent will be needed before getting a buy-to-let loan. You should also work out where you are planning to buy your home and think about which neighbourhoods are up and coming. If you are planning to undertake major work on a house or developing on a plot of land, it is worth getting in touch with property development solicitors. Ultimately, you can never be over prepared.
Think about the type of person you are likely to rent to before you invest in a property; will they be students, families or young professionals? Consider the demand in the area. If the property is located close to good transport links, or surrounded by good facilities then you are more likely to find renters. Scouting out the area in which you are buying should be one of your first priorities.
Check Lettings Agents
There is no doubt that being a landlord can be hard work, particularly if you have difficult tenants. Lettings agents can take away a lot of the strain in exchange for a fee. You may decide that they just take care of just the actual lettings process itself – advertising the property, finding a tenant and collecting the rent. The other option is full management which means that they will take everything off your hands including repairs and maintenance. Ultimately, you have to factor into your calculations the cost and work out which is the most desirable option for you.
Dont Forget About the Taxman
Remember that you will have to pay income tax on any profit that you make from rent. A number of the costs are tax deductible like repairs, letting agent fees and landlord insurance. You can also deduct any income you pay on the mortgage. As well as this, if you plan on selling the property then you will have to pay capital gains tax. Once again, it all comes back to making sure that you do all your sums.
Building a property empire is hard work, but for the people who succeed then it can really be a rewarding enterprise that is worth all the hours put into it.