Don’t Second-Guess Buying A Second Property

| August 3, 2017 | 0 Comments

Buying a second home is a big aspiration for many people as a way of generating an extra stream of income. But there are a whole range of factors that you should consider before taking this big step. If you don’t do it right, you could find yourself with a property that people are not at all interested in renting and your investment will certainly not pay off. But if you take your time to choose a place and make sure you get it into tip-top condition, you are much more likely to bring in that additional revenue that you are looking for. So, let’s take a more in-depth look at the key points you should consider before investing in a second property.

 

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Select a Promising Area

To start off with, we should go back to the old property adage of location, location, location. You essentially need to find a place that is desirable for people to live. When you are looking at a potential property, ask yourself whether it is in a good commuter area, if the transport links are good and what sort of facilities are nearby. Of course, you also need to match this up with what you are able to afford. And it is also worth considering the distance from your own home, particularly if you are looking to manage the property yourself.

Think About Your Ideal Tenants

Once you have zeroed in on a particular property or area, you should the start to profile your ideal tenants in more detail. This way, you will know better how to set the property up to suit their needs when you buy it. For example, if they are students, you will want the place to be clean and comfortable but it doesn’t necessarily need to be particularly high-end. If they are young professionals, you will want the place to have a modern and stylish look. And also consider how much freedom you are prepared to give your potential tenants to decorate the place in their own style and put their own stamp on the place.

Do Your Sums

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You will first need to assess your own financial situation and whether you are able to buy the place outright or whether you will need to take out a mortgage. You should then begin working out the sums carefully and work out the amount of annual rental income you will receive in comparison to the price of the property. So, you can work out your annual return by calculating the mortgage payments and buying costs in comparison to the rent you will be receiving so you can come up with a percentage of annual return.

Consider Going Further Afield and Home Improvement

Though buying a property in your own town may give you a convenience factor, you should also look at places that are further afield as well. If you are going to be employing an agent anyway, this won’t end up being such a big issue. Some of the best places to look either have good commuting links, they are popular with families or they have popular universities. You can boost the value of your investment by looking at properties that are in need of a little tender loving care. However, you also need to think about how much the improvement costs are going to stretch your budget.

Always Haggle Over the Price

 

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Just as when you are making any major purchase, it is always worth doing some haggling so you can get the best price possible when you are looking at investment properties. If you are lucky enough to be in a position in which you aren’t reliant on the sale of another property to buy the new own, this puts you at a natural advantage when it comes to negotiating. Start off by making low offers and stick to your guns until you can come to a reasonable arrangement. Having a good understanding of the market can also give you a big helping hand.

Consider Whether You Want to be Hands-On

We have already mentioned it briefly earlier on, but you will want to consider whether or not you want to take a hands-on approach or whether you want to outsource the task of managing your property to an external agency. Of course, you will save more money by doing this yourself but it is also a big time commitment as well. If you do go down the agent route, make sure you take the time to make a careful and informed decision.

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