So... you're considering taking the plunge and joining thousands of fellow investors to turn property in to long term wealth and security for you or your family.
There are usually a few reasons for wanting to invest in property
- To Replace Today's Underperforming Pensions
- A Proven Means to Build Wealth For Your Family's Future
- As an income to Subsidise/Fully Pay Your Own Mortgage
- Financial Freedom & Independence
- The Ability to Retire Early
This unfortunately, like most things in life does not come without some effort on your part. However, don't worry, by following simple principles and taking a little time to learn the rental potential of your initally selected area, you can quickly become adept at recognising potentially sound investments.
The First Steps
Select an area
Many first time investors can learn a great deal by looking at their local area and talking to local agents, checking property web sites such as Rightmove and Primelocation to discover areas which show a strong demand for rental properties.
Who will you be your market
Tenants can take many different forms... Young Professionals, Short term Corporate Lets, Young Couples, to name but a few. You will need to consider your potential tenants needs to quickly aid you in finding someone suitable.
For Example: Young Professionals may wish to be located within the heart of a city centre, with quick access to workplaces and evening entertainment such as bars, nightclubs and resturants within a short walking distance. Whereas a Young Couple looking for independence will often look more for affordability, cleanliness and starter home white goods such as washing machines, fridge/freezers, etc.
Finding the Right Investment Property
New Build properties can often be a excellent way to put your first foot onto the property investment ladder. Newly built or 'Turn Key' properties will usually come with a form of warranty against the stucture of property, brand new fitments such as Kitchens, Bathrooms etc, and occasionally flooring throughout the property, which can help to save a substantial cost on your part.
Pre-owned properties can also make for very sound investments, however you should consider the costs of making the property attractive to potential tenants, ie. Any structural repair work, clean or freshly painted surfaces, provision of white goods, bathrooms and kitchens in sound working order, etc...
Consider the Costs of Investing
The purchase costs are often interpreted as being the unpleasant aspect of investing in property;
- Initial Reservation Fee (often £2000, which is deducted from final purchase price)
- Any Finders Fee (payable for soucing and investigating the property)
- Valuation Fee
- 5-10% of Purchase Price (required for the exchange of contracts)
- Mortgage Fees
- Solicitors Fees
This initially appears to be a large amount however, by purchasing through Urban Investor, the savings made, usually a substantial amount, offset the costs incurred. Moreover, immediately upon purchase, investors have a credible equity investment.
Deciding to Purchase
Selecting a Suitable Mortgage
Finding a mortgage can often initally appear to be a minefield, but a guide provided by the Urban Finance Centre explains how they can significantly simplify this stage of the Buy to Let process by doing the majority of the paperwork for you and helping to proceed your purchase to exchange of contracts as painlessly as possible.
Instructing a Solicitor
A Solicitor that can proactively progress your purchase quickly will often help you to secure the best possible deals with regards to purchasing investments. Contact and discuss your requirements with a few solicitors, remember you may be using them to help you progress many purchases, you need someone that can help make the purchasing a smooth ride.
After reserving an investment property through Urban Investor, we provide you with details of our recommended solicitors to again make your purchase as smooth a process as possible.
Instructing a Valuation
It is a requirement that a professional valuation of the property is carried out, so that both you and the mortgage lender know that it's worth the agreed price. You can instruct this personally or your mortgage company can complete this for you via their recommended provider. In both cases, a fee is normally required for this. Once the valuation has been undertaken and the purchase confirmed, you should then receive a formal mortgage offer from your selected mortgage provider.
Proceeding to Purchase
Ok!... So you have made the decision to go ahead with your investment. We have provided a short step by step guide giving details of our purchasing procedure. Should you require any further clarity please do not hesitate to contact us on freephone 0800 881 8222 for help.
Congratulations!...
Once the property has been completed and approved by the developer. You solicitor will take care of the final stage of completion. Congratulations... You are now able to move in your tenant or instruct your letting agent to source one.
This initial purchase is first stage to putting you foot firmly on the property investment ladder and looking towards making your next wealth building investment for the future.