Buying a property to rent out can be a rewarding experience. However, it’s crucial to do your homework before putting in an offer and committing to purchasing a property. Your goal in considering properties should be to obtain the best value for your money. Here are essential factors to help you get the best value for your money irrespective of the value of the property
1. Repair And Maintenance Costs
It’s also crucial to consider the property itself – check out the roof, windows, wiring, and plumbing before signing on the dotted line. Though repairs are inevitable, they can be costly and time-consuming if the property needs significant repairs. In such a case, it’s an excellent chance to bargain hugely on your buying price to help you save on money for repairs.
Some investors like to buy cheap and fix it up. However, it’s important to involve experts in home maintenance services to help you assess the cost of maintenance and thus help you evaluate the best price for the property.
2. Rate of Return On Your Investment and Capital Growth Potential
It would be best to look for at least a 6% return on your investment. For example, if you buy a property for £120,000, you should expect to get at least £7,200 in rent per year to ensure that the property’s price meets this criterion.
If there is any doubt in your mind whether or not the rental income will meet the repayments on the mortgage, then don’t make an offer on the property. It’s better to be safe than sorry, mainly when dealing with large sums of money! However, if you are happy with the capital growth potential of your investment, you need to start looking at other ways to minimize risk and maximize returns.
3. Property Type and Location
One of the most crucial steps to buying a rental property is deciding what type of property you want to buy. You may choose either residential, commercial, or industrial property. The choice can depend on your investment goals and how much risk you are willing to take. Real estate is often a long-term investment, so it’s essential to choose properties that will allow you to meet your goals over the long term.
Different types of properties and properties in different locations can have very varied risks and rewards. Is it close to transport? Is it in a good suburb or area? Will the local amenities be adequate for tenants? Is your location convenient for travelers? If your neighborhood isn’t close to anything people will want to visit while in town, consider either a different location or you can purchase and consider a long-term rental.
4. Void Periods
One thing that strikes fear into the heart of any landlord is the dreaded void period, whereby there is more supply than demand, and you will struggle to find a tenant fast. A void period can impact the rent level or terms of occupancy sought by a landlord or agency, so it’s essential to understand all the options before purchasing a property.
The void period can be high due to charging rent above the ceiling for most people in the neighborhood. Therefore, it’s essential to keenly evaluate the neighborhood’s income potential versus what you are likely to charge. Similarly, a rental property that is not in good condition may challenge finding new tenants. In such a case, you can involve experts in home maintenance services such as MG Property Solutions to give your property a turnaround.
Therefore, it’s also essential to assess the property’s void periods in the past. The void period will affect the rate of return of your investment, and thus, it should also be an essential factor in determining the buying price and your refinancing options.
Ultimately, finding the property that will fulfill your business and personal needs can be a challenging venture. However, if you keep these factors and considerations in mind, you should be ready to make a sound real estate investment. Also, you can put your efforts into maintaining your property in safe hands by contacting MG Property solutions for quality property maintenance services.