Lets face it, there are times when everybody could use some extra pocket money. Whether to save as security for your children, or to treat yourself to extra-luxurious holidays two or three times a year, extra cash is always welcome in an increasingly difficult economic climate.
But where should you invest your money to guarantee a return profit? Well, the answer to that is simple. Property! Even if you already own your own home, property investment is a fantastic way to guarantee an extra source of income (and a large income at that!).
With different types of investment offering different advantages and disadvantages, it can be difficult to know where to began. This beginners guide to investment explores the two main investment types; “buying to sell” and “buying to let.”
Buying to sell
This option is best suited for those looking for a quicker turnaround in profit, as it means buying a property and quickly selling it on for a higher price than that which you purchased it. To achieve this, you will usually have to perform some cosmetic and renovation work, but can expect to sell within 1-2 years of making your purchase.
If you find a buyer willing to pay a good price, you can make more money instantly than you would being a landlord for several years, without the constant need to complete the administration duties that landlord have to carry out (safety checks, repairs and so on). This can make buying-to-sell appealing for those with less spare time, as once you’ve sold it, you no longer need to worry about it!
Whilst property prices are on the rise, there is not always a guarantee, however, that you will turn a profit. Losing every penny that you invested is the gamble with buying-to-sell, so you have to be prepared for this eventuality.
Buying to let
In short, this means that you buy the property, but charge a tenant rent to live in it. This is particularly appealing to investors willing to make a long-term investment, as the financial rewards have the potential to be better over a period of time than the option of selling the property.
With many landlords sharing their horror stories online, sometimes, buy-to-let can feel like too much of a risk, with the downsides of renting outweighing its potential for profit. This couldn’t be further from the truth.
Naturally, buy-to-let is a risk. You need to find a tenant but, more importantly, find the right tenant! It is better to wait and find someone who is reliable, who can be trusted to live respectfully and responsibly in your home, rather than just accept the first applicant that you see. This is one of the keys to making buy-to-let a successful investment.
You also need to be aware of your legal responsibilities. You must carry out the safety checks, complete the paperwork and perform any repairs or renovations (or else, by law, your tenant is not required to pay you). There are estate agents out there who, for a small fee (usually a percentage of the monthly rental income) will do this for you, leaving you to with far less hassle.
Investing in property can be a very confusing time, as there are so many different routes to owning your own home that it can seem like a bit of a minefield! Whether you choose to sell or let, take your time, seek the relevant legal advice.