The most Googled property investment questions, answered
Investing in property can be daunting for the uninitiated – we asked Gordie Dutfield, CEO of Redmayne Smith to answer the most asked property investment questions on Google
With so much potential when it comes to creating a passive income and building your own investment portfolio, it is no surprise that people want to learn more about property investment, especially with the rental market booming. To help people on their way to understand more I looked up the burning questions people were typing into Google – here are the answers.
HOW DO I GET INTO PROPERTY INVESTMENT? One of the first things you want to do when getting into property investment is do your research, especially around the various different types that exist. It’s important that you understand the different avenues you can go down, based on multiple factors – the amount you wish to invest, both from a time and money perspective; desired rate of return; and your network. Once you’ve determined all this, location is the first place to start, as this can make or break your investment – so make sure to conduct your research into where the current prime or up-and-coming locations are. If you then opt to let your investment property, and managing this yourself, we would also consider a location that is within close proximity to make this a smoother process – but of course there are alternatives to this.
WHAT IS A BUY TO LET PROPERTY? A buy-to-let property is one that you buy with the sole intention of letting out. Therefore, you need a buy-to-let mortgage, and will need to make sure the monthly rental payments are high enough to cover the cost of the mortgage and any additional monthly outgoings, whilst still delivering you a profit. Many investors will have multiple buy-to-let properties in their portfolio, and these can include a range of property types.
WHAT IS AN OFF PLAN PROPERTY? The definition of an off-plan property is one that is purchased before it has been built, when only the plans for it exist. An off plan property can be bought at various stages, sometimes before construction has begun, and right up until the construction has finished. There are many benefits, including getting a better price for your investment, being able to invest in popular areas and getting a choice of fixtures and fittings.
I recommend cities like Birmingham or Manchester as these are being invested in and consistently growing. This is even more the case now big businesses are considering locations outside of London
WHERE TO BUY PROPERTY FOR INVESTMENT? When choosing the best locations, you’re best to consider the cities and areas that are being heavily invested in. These are likely to be cities outside of London. Yes, London remains a hub, however with a higher average market value, it’s not achievable for every investor. I recommend cities such as Birmingham or Manchester as these are being invested in and consistently growing. This is even more the case now that big businesses are considering locations outside of London, or allow more flexible working.
HOW TO CALCULATE YOUR INVESTMENT PROPERTY RETURN There is a formula to work out the ROI on your property investments. It is typically calculated as: annual rent divided by purchase price multiplied by 100. You’re looking for approximately a five to eight per cent return on investment for a worthwhile purchase, with many investors considering anything above five per cent as ideal.
QUESTIONS TO ASK WHEN BUYING PROPERTY OFF-PLAN How is the deposit protected? What happens if I can’t get a mortgage? What are the expected returns annually over the next 5 years? What is the breakdown of investors to residential buyers?
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