Don’t Make These 4 Mistakes when Investing in Property

If you want to invest in property, then you have come to the right place. This guide will help you to avoid making crucial mistakes while paving the way for success in the future.

Not Having Clear Goals

Are you investing in a property so you can make a wage? Are you wanting to build a retirement fund? Or are you simply looking to benefit your child in the future? At the end of the day, your long-term goals are the driver for your strategy going forward. When you know your goals, you can then plan out what you need to do to achieve them. If you are investing so you can build up a pension fund, then this is great, but you do need to consider how much your interest rates or your day-to-day running costs are going to change as a result of having another property. If you are buying property to benefit your children, then hiring a tax specialist could be a good idea, as this will allow you to minimize any tax liability.

Not Purchasing UMV

Buying a property that is under the market value will give you a lot of protection should house prices fall. It means you might be able to remortgage at a later date and it also means you can increase your cash flow too. Just because a property is being sold under the market value, doesn’t mean it is a good investment though. There are a lot of other things you need to consider, so don’t just focus on price alone. Getting a property inspection done is always a good idea, as it means you can pinpoint any potential issues before you make your investment. 

Keep in mind that this proactive measure can allow potential investors to identify and address any potential issues before making a commitment. By taking this step, investors can ensure they are receiving value for their money and avoid falling victim to fraudulent schemes. 

For instance, during an inspection, investors may discover that the reason the house is priced below market value is due to poor structural integrity or significant repair needs. Identifying these issues early enables potential buyers to make informed decisions and negotiate a fair price that accounts for necessary repairs. Additionally, buyers may uncover other areas requiring attention, such as the roof, which could lead to leaks. In such cases, they may need to go the extra mile by searching online for professionals using keywords like “roofers near me” to identify skilled individuals capable of resolving the problem and improving the overall appeal of the house. 

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Rental Yield

Although property prices do usually rise in the long run, having a healthy rental yield is so important. For commercial and residential property, it’s important to aim for a rental yield of around 5%. Rental yield is calculated by dividing the annual income your property is bringing in, by the value. You will then need to multiply it by 100.

Inadequate Financing

When you are buying an investment property, you need to take out a buy-to-let mortgage or even a commercial investment mortgage. With categories such as this, you will have different products to choose from. An independent advisor will be able to help you out a lot here, as they can find you a product that aligns with your goals and your circumstances. You do have to plan for the cost of running your investment property too. Stamp duty, land tax and more are all huge considerations, and if you gloss over them, then you may find that, eventually, you end up paying the price, which is the last thing you want. If you want to make things easier on yourself, then one thing you can do is calculate all of the costs before you make your offer. If you do this, then you will be able to lower the amount you offer accordingly, so be mindful of that.