Property Investment
Also Read - Getting on the Property Ladder | Mortgage Conveyancing | Mortgage Protection
Are you wanting to invest in property? Perhaps on a dilapidated building in need of being modernized, only later to be sold for a profit. Or are you are a homeowner who wishes to invest in their home? Maybe performing home improvements which will later increase the market value of the property.
Investment in property is a complicated subject to cover because of the
myriad of different ways to invest in property and because of the
investors aims, that is what you want property investing to yield.
You may be looking at buying to let, this is buying a property with the
purpose of letting it out.
If property redevelopment interests you (buying a building in need of maintenance and modernization) with the intention of selling it later to make a profit. Because of the stock markets recent sluggish performance you may be looking at other ways to use your finance, such as buying a second home or buying a holiday home. You may be a home owner looking at improving your properties value, performing work on the building could lead to an increase of thousands on its market value.
Buy to Let - Rent for an Income.
Have you dreams of being a landlord responsible for your own property?
Perhaps you admire the idea of taking a rundown building and making a
profit with it? If so, then buying to let could be for you.
Buying to let is the term used for buying a building with the purpose of
then renting it out to tenants. You use the rent to make the mortgage
payments and any surplus becomes income. Buying to let is also a method
used to invest capital in the property market. More investors are
choosing to invest in the housing market and with rising house prices
the gains that may be made on a property investment could be
substantial.
If you are looking at buying to let as a way of investing in property
there are several things to be aware of and prepare for. These are the
finance, the property itself, advertising, tenants and the maintenance
of the property. You should approach buying to let the same as setting
up a new business and ensure you are aware of all the requirements
needed and have a suitable business and action plan. This will enable
you to approach investing in property logically and professionally and
should minimize problems and any financial surprises.
Mortgage lenders will require that a particular mortgage product is taken out if property is being purchased to then let out to tenants. This product takes the form of a buy to let mortgage and several factors will need to be covered and discussed with the lender after applying before the mortgage is granted. These factors include the buildings location, the business plan, the condition of the property, the target tenants, how much deposit is required and what other points need to be considered. The income from the rent will also have to be greater than the mortgage on the property before the mortgage will be granted.
Property Redevelopment - Building Profits.
Property redevelopment is the term used to describe the process of buying and then altering a buildings current condition. You could be looking at modernizing an old town house or even returning a property to its original built condition, this can include using any period fittings. The property can then be placed on the market for a resale which should make you a tidy profit on your original investment or maybe even fund your next project.
If you are looking at property development as a way of investing approach it the same has buying to let and ensure you are aware of all the requirements needed and have a suitable plan. This will enable you to approach developing property logically and professionally and should minimize any financial surprises.
What finance you use for the redevelopments capital is up to you. You may have sufficient savings already or you may need to lend to create the funds. You could choose a homeowner loan to raise the finance required but you may need to find additional partners for your project to ensure you have enough. Equity released from your home could be used as the finance, which you could receive from re-mortgaging. Or you could apply for a mortgage to raise the necessary capital to purchase and develop the chosen building.
Investing Capital - Increase your Portfolio.
If you are looking to invest capital in the property market, redevelopment schemes could offer you the opportunity to do so. There are plenty of companies after members to invest in ongoing or up and coming projects. These companies buy and then develop old buildings such as abandoned factories and offices into residential complexes enhancing the local area. If you are interested in investing in this way you should search for reputable firms or specialists in this finance arena.
Second Homes - Holiday Homes.
Do you dream of leaving at the end of the week to relax in a cottage in an idyllic location? Are you fed up with the daily commute to work and fancy getting a pad in town for use during the working week? If you answered yes you’re not alone, more and more households are buying second or holiday homes and not just because the economics of buying a second home have never been lower. With current low mortgage rates and council tax allowing reductions for second homes there's no reason why you can't have two homes.
How you finance the purchase of your second property is up to you:
- You could use the boom in property prices - if the value of your home has risen, you can re-mortgage and use the released equity. Buying outright if you have enough or you may use the money as a deposit and take out a second mortgage. Second mortgages generally require a larger deposit, meaning paying off two mortgages so a sufficient income would be required.
- You could opt to sell your home and buy two smaller properties with the proceeds, a flat in town for work and a home in the country for the weekends. Because both properties are small the joint cost could mean paying about the same as for your original home.
- There may have been a recent inheritance - which has left you wondering
what to do with it. Buying a second home can be a way to invest the
amount without being at the mercy of the stock market. Property prices
have risen steadily over recent years making them a sound investment.
You could be thinking long term while owning two homes, many people at
reaching retirement age are looking at releasing home equity to raise
income. Selling one of your properties and moving to live in the
remaining one will leave you with the proceeds of the sale.
And there is always the prospect of using your second home as a rental
for holidays. During the summer months the property could be let as a
retreat away from it all. Rent raised could be used as part of the
finance required to buy.
However don't just get carried away with the romantic notions of a second home there are real life issues to consider and remember:
- With a second home you are making a considerable commitment, not just in terms of finance, but also with your leisure time if the property requires work or maintenance.
- Check to ensure good traffic connections, easy to reach and hopefully not to much congestion.
- Remember if your property is in a holiday hotspot, traffic will increase during schools and any annual holidays
- The building will have to be secure and friendly relations with a neighbor essential if the property is empty at times.
- You will have to double up on all essential household equipment and keep gardens as low maintenance as possible.
- There will have to be a key holder for emergencies capable of contacting you if need be.
Home Improvement - increase your homes value.
Have you recently looked at selling your home but decided you're happier where you are? Were you after a larger property because of a growing family but didn't like the idea of the extra expense? Perhaps your current location is ideal for work or the children's schools and you didn't fancy the upheaval moving would bring. Well you don't have to put up with second best because the alternative is too awkward or inconvenient. With the boom in property prices there is a good chance you may have hidden equity in your home and if you release it you will have finance available to use on your current home for improvements. You could opt for a Remortgage on your property to take advantage of any increase in its value. You may wish to apply for a Secured Loan to fund any desired changes which should be considerably cheaper than using credit facilities offered by any firms you use for the improvements.
With the released equity or finance raised elsewhere you could improve your home in many ways:
- An extension would increase space in your property from reception rooms to bedrooms
- Convert your loft into a bedroom with en-suite bathroom
- If you have a cellar convert it into a kids playroom, an office or more storage.
- Having landscaping done such as sunken gardens or decking and patios is a simple way of making your garden unique.
- You could choose good plastic windows and doors, which apart from being weatherproofed have the added bonus of improving security.
- Security lighting, perhaps on motion detectors, should make thief's think twice and will make the entering and leaving of your home safer and easier.
- Build a garage with room for a small workshop
