If you are tempted to take a foray into the world of property development, don’t think that it is going to be as easy as the property auction TV shows would lead you to believe. Property used to be an incredibly buoyant market, with entrepreneurs flipping pads monthly and making thousands in the early noughties. Nowadays, there is a little more skill needed to outperform the market as it is more stagnated. With Brexit looming and an uncertain international financial situation on the horizon, flipping properties is no longer the way to go. Renting out your property may be the route you need to take to make your bricks and mortar investments really pay off.
Buy Well
When you think about buying a second, third or fourth property to let out, you must buy well. You need to buy a pad in a decent location and for the right price. If a property appears cheap and too good to be true, the chances are that it is. Instead, focus on the location where you want to buy and check out the property market history. If the area has seen property price increases for the previous five years, the chances are that this is an established area and ripe for investment. Ensure that there are good transport links, decent schools and low crime rates. As a rule of thumb, go for the property on the best street but in the worst state. This way, you can outperform the market by carrying out some renovations.
Budget
Managing renovations can be difficult if you have a full time job, but employing a full time project manager can eat into your profits. Instead, opt to do as much of the work yourself and outsource to reputable tradespeople. Ensure that you consider how you will keep your site tidy. Look for a waste transport company that will take away your rubble and construction waste on a regular basis. This way, your project will never have to slow down or halt. Budget for a scheme of works by working out the realistic asking price of the pad you have bought when it is fully refurbished and ensure that you don’t go over this when combined with your purchase price and renovation budget.
Renting
When you let out the property that you have bought, ensure that you vet your tenants. If you don’t, you could find yourself with missed payments, a wrecked dwelling and stress. Do credit checks and meet potential tenants if you can. If you cannot be a hands on landlord and you don’t fancy being woken up at three AM with reports of a leaky roof, consider handing the landlord responsibilities over to a property management company. For a small fee they will ensure that your rent is paid on time, they’ll take care of the maintenance and they’ll ensure that property inspections are carried out.
Only after a decade or so, should you consider selling up. This way, your long term investment will have come to fruition and you can walk away with a tidy profit. There is still money to be made from property.
