Investing in property can be a rewarding experience, however, as with any investment, it doesn’t always go to plan. Forewarned is forearmed, so before you take the plunge it’s worthwhile researching the potential pitfalls to make sure you don’t fall victim to any avoidable rookie mistakes.
Buying property is never cheap, but there are also hidden costs to consider. Make sure you have budgeted for worst case legal fees, stamp duty and mortgage costs. There may also be renovation and maintenance costs, not to mention having to make sure that your rental property is compliant with all regulations. Don’t bank on your property always being rented out either, there may be void periods between tenancies, plus you may have a tenant who doesn’t pay and the associated legal fees.
Your Legal Responsibilities
Make sure that you are fully aware of your legal responsibilities as a landlord. Take professional advice and don’t forget the taxation implications. There are so many things to consider, from protecting deposits, safety checks and right to rent checks, that you do need to adopt a professional attitude. Don’t forget that different councils may have local conditions to take into consideration, especially important if you rent out property in many locations.
Your Legal Position
Make sure that you are aware of, and prepared for, the worst case scenarios. Knowing your legal position when things go wrong can save a lot of stress and anguish. There are also things you can do to limit the effect of things going wrong, for example making sure you have adequate insurance and referencing your tenants thoroughly.
Your Target Tenant
Make sure before you start that you have a clear idea of who you are going to be renting to. This will influence how much you can spend on a property, the quality of finish and the location. It will also determine the level of rent that you can charge, hence you need to know in advance so you can calculate your return.
Location, Location, Location
Make sure you know the areas that are best for investing in property, and the areas to avoid. As mentioned above, your target tenant will influence this choice to a degree, but it really is vital you know your facts and figures before investing. One thing you can do is get hold of your FREE report prior to purchase so you know all the data needed to make an informed choice.