To successfully work out if a property is going to deliver as an investment you have to do five things – thoroughly!
| Step one: Know your local market It’s not just about seeing a property you like and buying it. You need to have to knowledge of your local market, is it on the rise, stagnant or falling. Do some research to check what's a good price to buy the property at and whether the rental income will cover your investment costs – and give you extra income. |
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| Step two: Spot a bargain Ideally as an investor you don’t want to pay top dollar for a property. You should aim to secure the property for around 10% less than it’s actually worth. You can do this by buying from someone who needs to sell quickly or buying a wreck for a bargain price so when it’s done up, it’s worth more than the cost of buying and renovating it. |
| Step three: Understand yield Knowing how to compare deals is really important so you have to be able to calculate yield. You do this by dividing the rental income by the cost of the property. Ideally yields should be 7% |
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Step four: Know the future
Buy to let is a 15-20 year investment anda lot can happen in that time.
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| Step five: Work out the tax implications Understanding the tax implications now and in the future for a property is vital. Creating or increasing your buy to let portfolio may actually COST you money as you have to pay extra tax. Work with a tax accountant to help you understand the implications of different property purchases. |
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