Property investment is one of the most popular passive income streams out there. Making money in property can sound pretty straightforward, yet there are many considerations to make before you get started. As with any investment opportunity, it’s important to spend enough time planning your projects before you begin.
Before you get started, it’s important to study the property market trends. For example, both the UK and the US are currently experiencing great demand for rental properties. Due to this, investors would be well advised to consider buy-to-let investments. As the COVID crisis negatively impacts the economy, house prices are likely to fall as we face a global recession.
HMO investments, also referred to as ‘house shares,’ involve each room in the house being rented out individually. Naturally, this is a popular option as it allows for a high income on the rent. Of course, when you have more tenants, you also have to spend a little more time on property management. You should also consider that a large number of tenants is likely to result in more maintenance issues.
When you are renting out your property to tenants, it’s wise to hire landlord & tenant solicitors. These types of solicitors commonly represent property management companies or landlords, they might, for example, handle disputes that arise between yourself and your tenants. It’s not uncommon that a landlord may wish to terminate an agreement with a tenant. When this is the case, there are several legal rules which you’ll need to follow. A solicitor can help you to navigate the correct legal processes.
Property investment arrives with risks, and it’s important to identify and consider the risks associated with each investment. You should always pay close attention to property market predictions when you are making your investment decisions.
When you are preparing to rent your property, it’s also important to cover yourself in terms of risky tenants. You’ll need to get background checks, financial checks, and references. These checks will ensure that you’re renting to a trustworthy individual (who’s good for the rent)! Remember, if you don’t have the resources to conduct these processes yourself, you can always use the services of a property management company.
When you are choosing a buy-to-let investment, you’ll need to think about your management processes. For example, are you going to hire a company to manage the property on your behalf? If not, you’ll need to carefully plan out how you will manage your property. You’ll need to think about
how you will advertise, how you will screen your tenants, the legalities of the contracts, and collecting payments.
Once you’ve purchased your first investment property, you’ll want to be thinking about expanding your portfolio in the future. It’s best to start small and to aim for diversity, purchasing different types of properties in different areas. The main reason that investors choose different styles of properties is that this tends to reduce the risks involved. A diverse portfolio will also contribute to improving cash flow over time. Expanding gradually is the key, purchasing too many properties at once comes with increased risk (and is not advisable for a beginner)!