Buying another property as an investment has come under a lot of scrutiny recently. Ethical concerns are being voiced surrounding the housing
shortage, and the extra stamp duty and tax incentive crackdown are making
investors think twice; but there are many people who are still keen to use
property as an investment in this time of
low-interest rates and unpredictable
stock markets in response to the current political landscape.
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Research other options
Are
you sure that this is the right way for you to invest your money? Have you
researched other areas to invest in? An
investment in shares or an investment trust like an ISA will mean that you
escape tax on the income you make, and get capital growth tax free. You also
have the ability to access the cash quickly if your circumstances change. You
need to recognise that property is a long-term investment.
Where?
You
need to locate an area that is up and coming, or likely to be improved in the
future that will appeal to potential tenants. Identify whether there are any
planned transport links, are the schools good in the area? Are there
universities or hospitals in the area that you are scouting? These points may
feel very obvious to ask, but their importance cannot be underplayed: you need to match your budget, property, and
services to the location that you are looking at.
Typically, people invest in their local areas because this is
the market that they know, and they will be able to deal with the management of
the property with ease. However, it is worth looking out of your area, you may
just find a property that will give you a higher rate of return on your
investment. For
example, the high-speed Javelin train from St. Pancras to Ashford only takes
under 40 minutes, which has meant that Kent is now ripe for property investors:
the Medway towns, Ramsgate and Margate are now more attractive to commuters.
Technology enables Conveyancing Solicitors in Kent to complete the sale without the need for you to physically
go to the office.
Rental Yield
Remember that
this house is not for you to live in, and it does not have to appeal to your
tastes and sensibilities. You need to have a clear idea of who the ideal tenant
is going to be. Your main concern is the rental yield. The rental yield is the annual income return divided by the costs
associated with the property (including insurance, maintenance and repairs),
and it is expressed as a percentage. The
higher the rental yield percentage, the better the investment. The rental yield
needs to be what you focus on, and what you do your uppermost to control to
become successful.
1 comment:
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