Everybody seems to want to have a slice of the property market. When prices are rising it seems like they will last forever and potential returns on investment are huge, when prices are low it’s a good time to buy because they’re only going to increase in value, right?
Investing in a second home or a buy-to-let scheme is always considered to be a safe option, especially in areas like Newcastle upon Tyne and Sunderland where houses are cheap but offer strong rental yields.
However, not every project is certain to make you money and doing it wrong can end up being costly. This is a quick guide to help you think about some of the things you should weigh up if you are thinking about investing in Northern UK property.
Know your end goal before you invest
Why do you want to get into property investment? Is it going to be your main source of income, a side project or simply a long-term investment that you can use to help fund your retirement?
Just like with any risky venture, it is essential that you know the end goal for your decisions. If you enter the Tyne on Wear property market blindly, you will likely end up making some costly mistakes. Because there is so much money in the property industry, there will be people around every corner trying to sell you the deal of a century, therefore it’s so important you have a clear mindset. If you aren’t sure what you are after, it will be very easy to get caught up in a long-term investment without any easy get out clauses.
If you are new to property investment, sit down with a pen and paper. Write down what you hope to get out of investing in the property market, how you plan to do it and ultimately why you are doing it. Then refer back to what you’ve written down whenever you get confused or feel overwhelmed.
Finding the Right Property
There are a vast number of different things you should be considering when looking for the right property to invest in. While a number of these are covered in the standard research, like the cost of body corporate services and required rental return. There is more research you need to conduct prior to settling on a final choice, here are some of the things you need to think about as they will change depending on your goals.
Things you should consider are:
- How scalable is the project?
- Is it high or low risk?
- How well do you know the area?
- How well do you know the types of tenants you want to attract?
Ultimately, this can all be quite difficult to do well, especially if this isn’t an area you are experienced in. Many people who take property investment on as a side project find themselves with very little time to efficiently take it on. That’s why many people opt to go for a company that will find properties in the northeast and provide an expert opinion.
Having a little bit of extra help from a professional can go a long way, and in a worst-case scenario, you can just choose to ignore it.
Research Correctly
Failing to do the correct research is a big mistake that many property investors can make, even experienced ones. This can happen if the research does not go deep enough, cover the right areas, is done with incorrect information or is simply lacking in key areas. Failing to conduct research properly can put a huge dent in the prospects for your new property. You need to think about everything that could potentially make renting it out to people difficult. It doesn’t matter how great your newly purchased and improved property is, if it is located next to a nightclub or has low flying planes travelling overhead making it impossible for tenants to sleep at night, you are going to lose money.
It’s so easy to fall into the trap of thinking that investing in the housing market is a dead-certain way to get a strong rental yield and that they’ll instantly start making money, no matter what. Experienced investors can also be caught out by feeling comfortable that they don’t tackle the research with the same passion or enthusiasm as they did with the first house on their property portfolio.
If you want to be successful, taking the time to do in-depth market research is so important. Not only can you avoid future problems but, you can potentially find the best deal for your money.
But it’s not just those new to property investment that can get caught out. Even people who have been in the game for years can grow comfortable and overlook some minor details that turn out to be really important later on down the line.
All this being said, sometimes the best option is to get an expert opinion. There are plenty of property experts up and down the country, however, if you are new to property investment or working with a smaller budget, the north east of the UK is a good place to start.
Expect it to Cost More
As with everything, there are always a number of additional costs when it comes to property investment. While they might not be hidden costs, they can almost come out of nowhere. No matter how much you think you’ve saved up or prepared, it is definitely a good idea to have some back up cash at the ready for any unexpected fees that could arise.
If you have already used your entire budget before getting slapped with a bill for something you haven’t prepared for, it’s an easy way to end up in a whole heap of trouble.
Here are just some of the charges you should expect to pay:
- Research Fees
- Property valuation costs
- Building Inspections costs
- Property Management fees
- Solicitors fees
- Stamp Duty costs
- Insurance
- Mortgage Brokers fees