Saving while you are young is traditional but investing as soon as possible is millennial. The growing property market encourages everyone to invest in it. Returns on investment are very possible, however, as this market is also volatile to many economic conditions, investment should also be well thought of. You can’t make decisions based on gut feel or pure luck. You must make calculated risks. If you are ready to invest in this industry, read this infographic thoroughly, so that wrong decision will be avoided.
1. Evaluate your cash flows. Money has time value. Since this is a long-term investment, you must assess both the present and future value of your money. Can you afford it even with future inflation rates? Can your bank loans sustain the required investments? Visualize how your finances will move given the possible costs and fluctuations in the market.
2. Avoid cost underestimation. If you are using a top-down approach to budgeting, you need to be flexible in accommodating other costs such as repair cost, maintenance, paint, etc. These are costs that are not seen on site but your estate agent will tell you to do these so that your property will also become saleable in the future.
3. Making an investment is not a sure win. There are areas in the UK where prices for houses are not doing well but there are also some which experience growth despite uncertainty in the market. You need to have good judgment as to which markets will be lucrative enough for your investment. Probably, you can choose properties that are nearby schools or offices.
4. House hunting can be fun because you see a lot of houses that only your imaginations have made. However, as you see your dream house, don’t buy immediately. Looks are deceiving as they say. Check the interior of the house, materials, and price. Falling in love with the house is fine, but buying out of caprice is not a mind for a businessman. So, make judgments based on the possible returns, payback periods, and other financial ratios that could justify the amount of investment.
5. The first step is to check it on your own but your next step is to let the professionals assess the property through a building inspection. Why is this necessary? There are areas in the house that only they can make an evaluation about. Not because the painting is good, what beneath it is also in good condition. It will allow you to avoid possible repair cost when the property becomes yours.
6. Always stay on your goals. Will you be a passive or aggressive income earner? Tax rates are changing and economic conditions are fluctuating. If you don’t know why you are investing, your money will eventually blow away.
7. Organize your finances very well. Revenues and costs are two different matters but without proper recording, you will just be shocked to know that you are actually spending more than earning. Include all the costs such as maintenance cost, insurance cost, management, and advertising expenses, in your bookkeeping.
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