Property is a highly popular investment method for millions of people all over the world, and the UK is no exception. Thousands of investors enter the property market each year, looking to start their property portfolio and earn profits. But the real question is how to get into property investment in UK? For that, you should do in-depth research and consider a number of criteria before making an investment.
Here are some of the property investment tips you may consider before you secure your asset:
- Set your goal
Everybody looks to invest in property to make money and growth their wealth.
But, to really maximise the potential of your investment, you need to make sure that you have a long-term view. Property as an asset may deliver the biggest gains when the investment is for the long term.
This is especially true if your ultimate goal is to achieve the highest possible amount of capital appreciation from your property investment. Allowing your property enough time to mature and gain value will help you to achieve this goal.
So, if you are considering how to get into property investment in the UK, it’s important to think long-term when your goal is to gain a regular income in the form of rental yields. Similar to property values, you can gradually achieve higher rental income over time in line with market conditions.
- Consult a financial advisor before proceeding
In addition to your own research, it’s imperative that you seek the support of an independent financial advisor.
They will be able to support you with all aspects of a potential property investment, especially in areas with which you may not be familiar.
From tax considerations and regulations, to costs and issues around mortgages, an independent advisor will offer you total support and will help you plan out all aspects of your investment.
They will give you a clear idea of your aims and what will be achievable based on your personal circumstances.
- Define a budget
In an attempt to buy the best investment property, some investors make the mistake of overstretching themselves at first.
It’s important to only invest in what you can afford, as overextending your funds can lead to problems throughout the duration of your property investment.
Firstly, taking on too much leverage will increase the amount you need to spend on repayments and so decrease your money for other, important areas of your budget, such as property maintenance.
You also need to give yourself enough leeway for any potential downturn in the performance and/or value of your property.
Ensuring that you only invest in a property you can truly afford, whilst also leaving an additional cushion for all related costs, will help reduce financial stress and make your investment more efficient.
- Choose a property sector that is suitable for you
There are a number of property sectors to invest your money in, each with its own strengths and weaknesses.
Residential property is one of the most established forms of investment property. In recent years, specialist property sectors, such as purpose-built student property (PBSA) and build-to-rent residential property, have become increasingly popular amongst investors.
In the case of first-time investors, it’s perhaps best to choose one sector at a time rather than trying to quickly buy multiple properties in different sectors.
But once you have an understanding of each sector’s merits, and its ability to help you to achieve your overall investment goal, you should be better placed to make an informed decision.
- Focus on supply levels and price when choosing a location
It’s tempting to select a location purely based on the latest price and performance data.
While that is, of course, still a key factor that should form part of your decision, it is also important to choose a town or city which is projected to record strong price and rental yield growth in the future.
It’s also important to consider local supply levels, particularly in regards to the type of property that you’ve decided to buy. A city may have generally strong growth projections, but does this extend to the sector you’re about to invest in?
For example, choose locations where the demand for rental property is outstripping the supply of it. Only buy student property in a university town or city which doesn’t already have an excessive amount of stock, in comparison with the size of and demand from its student population.
Doing this will ensure that your property is likely to be in high demand from local tenants, driving your current rental returns and ensuring a steady, or increasing, income for years to come.
- Keep up to date with the latest market research
Similar to the point above, keeping up to date with the latest market data and news will further ensure you’re choosing the right sector and location.
It’s also integral that you are aware of new and emerging tenant trends. This will help you to make any necessary updates to your property, and changes to your investment strategy, to ensure your property remains in demand in an evolving tenant market.
- To begin with, consider a fully managed property
You’ll likely need to choose a management option if you do not have either the time or the expertise to manage the property on your own.
If you are a first-time investor, selecting a fully managed option for your investment may be worth some consideration.
Managing a property investment requires a lot of work and specific skills, so you would need a lot of spare time to undertake this yourself.
For many property investors, the pressures of renovating the property, marketing and advertising to the rental market, and regular maintenance responsibilities can be overwhelming. Without prior knowledge of how much work goes into property investment, and how much all of this work is likely to cost, financial stress may also become a factor.
- Don’t be afraid to invest in times of uncertainty
Caution is a natural human reaction to uncertainty. And when it comes to investment, wider economic uncertainty sees many investors apply the brakes on any new investments.
This may seem wise, after all, as markets react and suffer potential losses and retractions, why would you want to invest in an asset that is losing value?
But there is a distinct advantage to investing during these times; often, investing at a time when many others won’t be, is when the greatest returns are made due to lower prices. And this is something that has historically happened with property investment.
So, don’t be afraid to consider a property investment at times of wider uncertainty. Real estate is renowned for its ability to remain resilient even in the toughest economic climate. What’s more, unlike many other popular assets, property can still deliver you a regular income in the form of yields during these times.
- Only work with credible developers and agents
Above all, you should only do business with trustworthy and experienced agents and developers.
Research the company’s track record. How many properties have they successfully sold?
And be sure to check their prices against market averages. Is the asking price significantly lower than local market averages? If so, why is that?
As with any product, if the offer seems too good to be true, then it probably is. It’s important to exercise caution and to consult with your financial advisor before parting with any of your money.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.