7 Important Tips On Investing In UK Property

1. Avoid bad tenants

The most important part of your investment will be the type of tenant you are able to attract to rent your property. A bad tenant is someone who thinks they can get away without paying their rent without good reason; they might even cause damage to your property.

It may not be possible in all cases to avoid this type of tenant, however there are certain steps you can take to reduce the risks. Selecting a reputable managing agent to find a tenant for you is one good way, and worth paying a little extra for.

You might also need to go with your gut instinct and select the tenant you think will be the most likely to be reliable. If you are going it alone, screen your potential tenants carefully as this could either make or break your chances of a successful investment.

2. Avoid high service charges

Service charges are more likely to affect those investing in more modern housing or apartment developments.

Some are offered on a leasehold basis, that can range from 99 years to 999 years. If you do not own the freehold on the property you invest in, you can end up with a shock further down the line.

As one investor in a development in North Wales explained:

“I chose the apartment because I was able to get a good discount and prices were rising at 10% a year. It was in the town centre and the area was up and coming at the time.

I felt I couldn’t lose. Unfortunately, along came the market correction in 2008, this was followed by the building’s owners pulling out of the management of the property and handing it to a succession of property management agents.

The service charge subsequently doubled within 5 years and this has had a real impact on my cash flow. The one consolation is I can easily rent out the property due to demand in the area, however the exit strategy is uncertain in the medium term.”

3. Invest in cash flow positive opportunities

Finding ‘cash flow properties’ is unlikely to be easy, as most will attract the attention of seasoned portfolio builders.

The most important thing to consider as an investor or someone new to the market is to find property close to major transport links, shops and other local amenities. Research the likely rent you can achieve, and then go for the best discount available.

Don’t forget to allow for things like service charges and other likely costs of ownership when you work out the potential yield. As long as your mortgage and other costs are lower than the rent, then your property is cash flow positive.

4. Letting to benefits claimants

Letting a property to tenants on income support or claiming benefits towards their rent can carry the risk of payments being missed. According to those who operate in this sector, more effort is required to manage the investment and there may also be problems with the credit history of the tenant.

Unless you know the laws and have obtained detailed information from the local authority on any issues you might face it is advisable to steer clear of this type of investment.

5. Choosing a good rental property

As with any other property market, doing the research before you invest is well worth the effort.

In the UK, properties close to good schools or universities will rent easily. Often you will find only one or two properties available to rent, close to good primary and a good kindergarten school.

However, we need to weigh up the above with what it costs to actually buy the property in the first place. If you are lucky enough to find a distressed seller then great; otherwise, as a rule of thumb, look for properties close to town or city centres in areas where jobs are in good supply and property prices are not too expensive.

6. New or old developments? 

This really depends on your appetite for work and the amount of time you have to put into repairs and refurbishments if you are opting for an older property.

Tenants can be very choosy and you are likely to find a better quality of tenant if the house or apartment you are offering is new, or at least in a good condition.

On the other hand, new-builds may end up being costly if the freehold landlord fails to put in place any provision for maintenance of an apartment block or costly repairs that might be needed further down the line.

When it comes into developments, try to check rain gutters to avoid stagnant waters caused by leaves. Leaf guards is now made to solve that problem.

7. Areas to avoid

Avoid rundown areas with little prospects of investment. There is little point in guessing which areas will be the next up and coming if it will take decades for the area to get there.

Of course there is also the other side of the coin, where an area may be in line for a ripple effect when national prices start rising again. This area may have a bad reputation that has held down house prices in the past but investment in local infrastructure and a new-found importance can transform a location quickly into a hotspot. Think Salford Quays in Manchester, for example…

Bonus Tip

Get yourself a good Gutterbrush Ladder Stabilizer. It’s a great product that will be a must-have for all your homes.

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