According to investment statistics, the buy-to-let sector enjoyed double-digit growth over the last several years. More and more investors are becoming property developers, focusing on properties for renovation that can be purchased and then let out to tenants.
The advantage of this type of investment is that it provides a long-term return. Unlike buying homes and quickly selling a few months later, renting offers residual income that goes on year after year. Property investment is one that adds quite a bit of stability to an investment portfolio.
If you are thinking about buying and renovating homes for investment purposes, here is our quick guide to get you started. Be sure to do your homework before you begin investing.
Because real estate is a long-term investment, it requires quite a bit of planning. You'll first need to sit down and figure out your current capital resources, how much you want to spend during your first couple of years, how you will cover financing needs, and what type of return you are hoping to get.
Putting these things down on paper will give you the perspective you need to move forward. Buying houses for renovation offers you great bargains and a potentially high-yield, but not if you do not have a plan in place ahead of time.
If you have enough cash lying around to purchase several homes upfront, you are in a very good position. However, the majority of today's property investors do not have that kind of money. Most work normal jobs and have decided to invest in order to secure their financial futures. For them, mortgage lending is a requirement.
If you want the highest return on your investment, you need to shop around for financing. The first deal that comes your way is not necessarily going to be the best one. So just as you would for a traditional mortgage, compare interest rates and terms from five or six lenders.
With a plan and financing in place, it is time to purchase your first properties for renovation. Your best bet is to look for these properties using an experienced agency like Fruitful Property. This increases the chances that you will find the best properties available in the area you're looking.
If you are planning to purchase multiple properties in a short period of time, experts suggest you concentrate on one geographic location. As you gain experience, you will learn what a given area can sustain in rental payments as well as what it offers in terms of amenities.
For many investors, starting the renovating process on their first property is an exciting time. Nevertheless, do not get carried away in your excitement. Keep your renovations within budget, make sure everything is done according to the law, and do not become emotionally attached to your properties. Remember this is a business.
Second, make your renovations with an eye on your future tenants. Imagine what it will be like to live in the house once it's complete. You want to make the house attractive, but you also want it to be efficient and functional.
When your renovations are complete, it's time to put your home on the market. Be selective in your tenants. The last thing you need is someone living in your house who is consistently late on rental payments and/or treats your property poorly.
Buying properties for renovation is a great investment opportunity that offers an excellent yield. If done correctly, it can provide you with income that will protect your financial future.
Buying properties for renovation is a great investment that offers an excellent yield. Done correctly, it can provide you with income that will protect your financial future.
No investment strategy works well without budgetary constraints in place. That's especially true in the area of property development. The investor wishing to maximise ROI does best when he/she learns how to renovate a house with a tight budget. It can be done in a way that yields the highest return possible.
If an investor has money to spend, should he/she consider every type of investment – including property development? Not necessarily. Successful property developers are a unique breed of investors with a different mindset. More traditional investors do not always make good property developers because they lack the mindset necessary to succeed.
The housing crisis has reinvigorated the real estate investment market as more and more investors are building portfolios through buy-to-let properties. Buying derelict houses offers a great return on investment in the long run. But only if investors avoid the pitfalls that come with the real estate business.
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