Investing in property can be both lucrative and secure. One of the easier ways to move into the world of property financing and investing is to purchase a home to renovate and sell on or to let. For first-timers, there are a few ways to simplify the process.
Advantages of a Bridging Loan
For buyers who plan to renovate and sell on, a bridging loan might be the right choice. This is a short-term secured loan that can be quickly approved. Some types of bridging loans do not need to be repaid for as long as a year or 18 months. However, it is important that any renovations can be completed and the house can be sold within this amount of time since as with all secured loans, property must be put up as collateral.
Choosing the Right Property
Whether the intention is to sell or let, a few principles should be followed. For first-timers, it is best to purchase a property that needs only cosmetic renovations. A good place to look is neighbourhoods that are likely to be the next up-and-coming ones, such as those adjacent to areas that are growing in demand. To-let properties that are in less-costly suburbs but that are near major areas of employment or transport may be good choices.
Tips for Renovating
The goal in renovating should be to choose the fittings and fixtures that will be attractive to the widest number of people at the lowest cost. This means setting aside personal preference. If the property is being lightly renovated for rental purposes, it is important that any renovations should also be durable. Money should be spent on one or two features that will be particularly striking to renters or buyers.
An easy cosmetic renovation to start with gives first-time property investors the opportunity to get to know some tradespeople and get accustomed to working with them. Later, they may want to take on more complex projects, such as a home that lacks a working kitchen, but it is best to avoid these to start with. It is generally safest to leave a wide margin of error in both time and cost when it comes to renovation. This is particularly true if there is a bridging or secured loans that must repaid within a short time.
Tips for To-Let Properties
First-timers who decide to go into the letting business will first need to decide whether they want a single or multiple-tenancy letting. Single-tenancy can be the easiest and most straightforward approach. Sometimes it is possible to get long-term tenants who take good care of the property for years. One disadvantage of single is that money is lost during the periods between tenants.
Multiple-occupancy lettings can be much more complicated and expensive. However, they can also be significantly more profitable. There may be a much higher tenant turnover rate, but a vacancy will not be as difficult to deal with financially as in a single-tenancy. In multiple-occupancy situations, tenants usually pay a flat fee that includes the cost of utilities.