Want to Become a Full-Time Property Investor?
For many people, it’s the ultimate dream to turn their life around and become a full-time property investor.
Sound familiar? If you’ve got a genuine passion for property and have got a scope for investment, it can be a highly profitable and enjoyable venture. Also, with Buy to Let mortgage rates so low, it’s an excellent time to borrow.
But while it’s an attractive premise, it’s not a decision that should be taken lightly. If you dedicate your work-life to property, it won’t just be money you’re investing, but time and brain power too.
Here’s what you need to know if you’re thinking of taking the plunge:
Do Your Research
The first step is to sit down with a blank page and hash out best and worst case scenarios. You need to be asking important questions such as:
- Exactly how much do I have to invest right now?
- How much can I sensibly borrow?
- At the moment the interest rate is x, what would happen if it rose to y?
- What’s the best area for tenants?
Realistically, you need to speak to an experienced mortgage broker at that point. All of these questions are second nature to someone who knows their stuff and they’ll have in-depth knowledge of the Buy to Let the market and the best deals out there.
Find Your Niche
You’ll need to look at targeting a specific type of tenant so you can be focused and strategic. For example, are you going to rent to families, professionals or students?
Each scenario has individual considerations you’ll need to take heed of. For example, a professional tenant will ideally need to be close to a train station. A family will rely on bedroom sizes, good schools, and garden. A student will need to be close to a university.
You’re the best bet is to speak to a friendly letting agent who can talk you through all your options and help you decide what is right for you, and the best area to buy in.
Check out this article by This is Money on cherry-picking the best tenant for you.
Ask Yourself Tough Questions
It’s time to open up a spreadsheet and crunch some numbers. The aim is to be healthily skeptical and realistic, there’s no point kidding yourself at this stage!
- Punch in all your numbers - but be conservative.
- Is the rental yield enough? Rental yield is calculated by measuring annual rental income against the value of the property (5% is considered a solid gross yield).
- Will you still make positive cash flow if interest rates spike?
- What will happen if rents decrease?
It’s more important than ever to get a second opinion at this stage, so make sure you speak to a trusted agent for expert advice.
Think of it as a Business
Effectively you’re starting a small business, that’s going to need to meet all legislative requirements, managing people and being on call 24/7. You need to understand your responsibilities and how to carry them out effectively.
There are a ton of complex components to wrap your head around: energy performance certificates, safety reports, right to rent checks and keeping on top of ever-changing legislation to name a few.
Ultimately, an experienced property management company is going to make your life easier. We’re anticipating a whole host of new legislation to come through in upcoming years, which will be a full-time job to decipher in itself!
It’s important to remember that there’s no such thing as an ‘easy let’. Getting a trusty property management company on your team will take out all the annoyances, so you can concentrate on the parts you enjoy the most.
Ask us a question about property investment.