Property Research and Analysis
Why do you want to get involved with property?
This is the most important thing to do before you get started. There are many TV shows which may lead you to believe that becoming a property investor and a landlord is the easiest way to make some cheap hard cash.
I can safely say this is not the case at all. Yes you can make some great income and possibly some great capital gains on a property, but it’s not all plain sailing.
Knowing why you want to become a property investor is the starting point.
I have to be honest, we watched the TV shows – Homes under the Hammer, Location, Location, Location and Sarah Beeny’s Property Ladder. We sit and think we could do better than that, surely it’s so easy! Easy to pass judgement when it’s not you doing it and not your money involved.
This was our catalyst to get into property, but our why was to create a passive income to enjoy a fantastic work/life balance around our 2 young children. We enjoy working with property but the passive income is our ultimate goal. Your why is probably very different to the next person, so it’s important to understand your why to keep you moving forward if the going gets tough.
Doing your due diligence and what is it?
It’s imperative to do your due diligence thoroughly on a property deal. Due diligence simply means that you check out the investment thoroughly.
The key to successful buy to let investing is to purchase a property in a location where there is strong rental demand and the rent “Stacks up”.
This means that the rent is enough to cover all of the costs and still leaves a profit for you at the end of each month. It needs to leave you with a positive cash flow after all the expenses and it therefore, gives you a good return on investment.
- It is safer to work with the net yield, as this gives you a truer picture as to what will end up in your pocket at the end of the month.
- Gross Yield = annual rent/purchase price
- Net Yield = annual rent less running costs/purchase price
- Make sure you take into account all the costs that you will incur, these include:
- Interest on your mortgage
- Landlord insurance (make sure you get Landlords Insurance and not just a household policy)
- Management fees (if you use a letting agent to look after your property for you)
- Service charges (if you have a leasehold property)
Get a property valuation
It’s important to understand the value of a property, whether you’re buying, selling, investing or just interested.
You can find out the estimated current market value of a property using this instant online valuation tool.
It’s very quick and easy to use – simply enter your postcode and complete the questions to give you the most accurate and up-to-date property valuation for any area in the UK.