Despite the property market being shaky, homes are still big business, and the average costs of renting or buying a house remain high. That’s why so many people still invest in the property market, either as a way to save for the future, or to give them an everyday income to live on. It can be a risky market, but can also pay off big if you get it right. Always make sure you get the right financial advice before you make any decisions. Here are a few ways you could make money off the property market, and the pros and cons of each.
Buy to let
Buying a property in order to let it out is a popular option with many people who are just starting out in investments, or perhaps have inherited a property, or have a second home that’s not in use. Some of the advantages include:
- A regular, monthly income
- Rents are high in most areas, so profits can be big
- A property agency will take care of most aspects of renting
- Rental properties are in high demand in many places
If you’re looking at a property that you wish to buy to let, then make sure you get a realistic appraisal of how much rental income it will generate before you make an offer. Remember that you will need to deduct any mortgage, and pay income tax and letting agents fees out of your tenant’s rent.
It’s important to pick a property that’s in an area that’s popular, or is up and coming, as this will ensure a steady stream of tenants. Take a look at places where rent is rising for the best investment returns.
Buying cheap properties and renovating them can be a great way to make profits, but it’s an area where you need to do your research to make sure you maximise returns.
Many people buy ‘fixer uppers’, as they can be a good way to build a nest egg for retirement. When you take a look at your state pension forecast, you may be concerned that you won’t have enough to retire on, and buying cheap properties can be a way to get a nice profit that can be turned into an annuity when you retire.
If you have any kinds of DIY skills or know tradespeople personally, then you can often cut the costs associated with renovation. However, many people prefer to let a professional builder oversee the entire job, including project management, as it’s much less stressful for them. It’s important to get plenty of quotes, ideally before you buy a property, so you know exactly what the potential costs and profits could be.
Flipping a property
For those with in-depth knowledge of the property market, or those willing to do their research, it can be possible to make a profit by simply buying at the right time, then selling once the price goes up. That’s the whole game. There’s no renovation work done, and theoretically you make money for very little work. House flipping is a very risky way of investing in the property market, but it can have big rewards for anyone who is confident in their ability to spot a bargain. It’s kind of like high stakes gambling, so you shouldn’t put up money that you can’t afford to lose, and it’s always good to seek financial advice before attempting this kind of transaction.
Investing in property has many advantages, but as with any investment, you need good advice from professionals and nerves of steel to give it a go. Start small and do your research, and you will feel much more confident about your investments.
About the Author:
Hollie Lynch is a freelance writer from Money Vista, an online tool for building personal financial plans. It aims to help users in exploring different funding options and in making the right choices for successful money management.