If you read part one of this blog then you will know that there are a lot of things to consider before you choose to invest in property.
Today we are going to expand a little on some more important points you will need to consider. I'm going to pose a few questions to get you thinking a little bit deeper about property investment as a whole.
How Many Properties Do You Want
This may seem like an odd question, but have you got the time to be an investor? Even managing one buy to let can be stressful and time consuming if you don't know what you are doing.
Some tenants can be a nightmare and very costly. Likewise, renovating property is a very time consuming and complicated business. You will find yourself working long hours. Have you any idea how much time these two ways of investing can take up- and do you have that time to spare?
It's not as easy as the glossy magazines or property guru's will have you believe.
Do you have spare resources?
Where will the money come from if your boiler breaks down in your rented property or you need to replace a fridge? If you are buying to sell, have you included all the costs and allowed yourself some extra contingency money.
Renovations always throw a few curve balls at you, and you need to know that you have the money to finish the project- and pay for the mortgage until it sells. Have you factored in an interest rate rise, as that one item alone can eat away at your profit margin surprisingly quickly.
Know Your Tax Implications
Are you aware of how the different forms of investment will be treated for tax? Tax is a big issue in property, as, all forms of investment carry different taxes. If you are buying/ renovating and selling property you are called a "trader" whereas if you buy to let then you are an 'investor'.
It's extremely important that you understand the tax implications of both- because they are treated completely separately by HMRC. Do you know what these terms mean? You must get familiar with the rules so that you don't loose your profit to the tax man! The Government are already looking more closely at tax returns due to the current financial crisis.
Rules & Regulations
Whilst we are talking about rules, did you know that there are over 70 pieces of legislation to comply with to be a landlord? Do you know and understand them? The current government ( Labour-when this piece was written) are obsessed with rules. A couple of examples are; how to comply with Tenancy Deposits, EPC requirements or even safety rules for gas and electricity provision. And these are just the easy ones!
Surround Yourself With Professionals
You must have a good team around you if you are planning on investing in more than one or two properties. Do you have a good accountant that can guide you and who is a property specialist? A good tip is to seek out an accountant who invests in property themselves and therefore are more intimate with the various ways to deal with the common issues.
A regular accountant may not be so good at this and could miss some things which you could claim for. You will also need a good mortgage broker for cheaper finance. Cost effective finance structures can make or beak a development for instance. Literally.
Market Issues
Being successful at property investing means you will need to understand more about the general economy. Can you judge when a market is likely to fluctuate price wise and do you have a good grasp of financial affairs?
If you don't know these things your long term profit could be seriously effected. Or, you could get wiped out by one bad deal going wrong due to mis-timing a sale for instance. Property investing is a serious business, it involves a lot of hard work, a lot of knowledge and a myriad of skill sets.
It's All About The People
Above all, property investing is a people business- from dealing with tenants, estate agents, viewers, workmen suppliers and so many more. Are you comfortable communicating and making decisions with folks on all levels? Do you want to do this on a daily basis? Are you good at solving problems?
Because, at the end of the day,the buck stops with you.
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"Hi I am Roberta Ward and my company – My Property Mentor started life as a help site for landlords and new investors to learn about property investing safely, away from the ‘get rich quick’ mentality of some of the larger clubs and marketeers. By way of 1.2.1 mentoring and networking events I spent time helping others.
We are currently involved in an a much larger event in Essex called be2campeast, which is revolutionising tired networking formats, and something we are very proud to be asked to run. Alongside that, the company has moved into the promotion of ethical money and property investing.We are heavily involved in social media promotion and are full time investors running our own portfolio and renovation projects."
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