It is an incredibly satisfying feeling to know you have reached a state of financial independence...
It is an incredibly satisfying feeling to know you have reached a state of financial independence and are no longer reliant on a job in the conventional sense. Property investment is an excellent way to reach this goal provided you follow some simple steps:
Without a plan you do not know where you are going. A plan is essential to ensure you have targets and that the planned purchases are feasible. You will need to have access to funds from time to time and this will involve releasing equity from your properties. Each one should be able to fund the next and the timescale of your purchases in the plan should reflect this. A plan will also allow you to know where you are; at which stage of the plan. It is also far easier to make adjustments to your strategy according to market conditions.
Choose Your Property
Some properties are higher risk but with potentially higher returns on investment. These can be a good idea if the plan is to have enough funds to clear all debts for retirement. Alternatively, you may refer to properties which return more month on month for your initial investment. It is essential to know what your aim is in order to build the portfolio that suits your needs.
Most investors will have a mix of the two types of property. It is also essential to consider the area you are purchasing in and your intended customer. Families looking to rent will want to be near a school, shops and maybe a park. It may help to befriend your local estate agents and ensure you are top of their mailing lists.
Get Professional Advice
Everybody’s circumstances are different which means that every strategy is different. It is vital you get professional advice on tax and financial planning BEFORE you buy the property. Getting the structure right at the outset can save you tens of thousands of pounds in the future.
Reasons to Invest
- The price of any property can rise as well as fall but these fluctuations tend to happen slowly, particularly in comparison to the stock market. It is fairly easy to plan when to purchase and when not to.
- Property has traditionally risen in price over the long term. Provided your plan is long term and you are not looking to release equity in a hurry then you are almost guaranteed a good return.
- Investment properties can actually provide you with an income once rented out.
- It is possible to ‘flip’ a property. If you manage to purchase a property cheap and either benefit from a short term rise in the market or improve the property then you can sell it for a much higher price. This is usually completed in a relatively short timescale.
Types of Borrowing
It is essential to have the initial deposit and ideally this should not be as an equity release from your existing property. You do not want a collapse in your property portfolio to risk your own home. The main options for borrowing are interest only mortgages or repayment mortgages.
- A repayment mortgage means you will be repaying the interest and capital monthly over a set period. At the end of this the property will be owned entirely by you.
- Interest only mortgages are much cheaper monthly as you are only repaying the interest on your loan. However, at the end of agreed term you will still owe the initial amount and will need to repay this somehow.
You will need to decide whether to let your property furnished or unfurnished and this will, again, depending upon your target customer.
Belvoir Bracknell don’t sell property, we are lettings specialists, but we do guide people based on our experience as to what might make a good buy to let property investment in the Bracknell, Wokingham, Crowthorne and Binfield area. We don’t charge for this service but we would like to manage your property or help you find great tenants. If you would like to have an impartial chat why not pop into our office in Market Street, Bracknell or ring 01344 209088.