Investing in your first property is probably one of the most important milestones in your life, but it’s crucial to ensure that you’re ready. You need to be in a stable financial situation and be well informed of all your options. Fortunately, there are plenty of schemes in place which can help you, but it’s a good idea to seek professional advice before you decide. Whether you’re buying a property to live in yourself, or a rental, real estate can be a great investment. As long as you’re prepared and have thoroughly mulled over your decision, getting on the ladder can bring you many opportunities. Here are ten tips for investing in your first property.
Research your financing options
Find out how much you can borrow and the types of financing available to you. This could range from a first-time buyer’s mortgage to a buy-to-let mortgage or a home loan. Speak to your bank and get some clear financial advice. It’s also a good idea to shop around a bit. It often depends on your personal and work situation. You can use mortgage calculators online as well to find out roughly how much the payments will be.
Look into government schemes
There are government schemes in place to support buyers. These include the new Help to Buy which is an equity loan available to first-time buyers interested in new builds. If you’re investing in a rental property, your entitlement will be different, however. Find out everything you can about the tax implications of each solution you’re considering and the benefits available to you.
Seek professional advice
Investing in property, as a home for your family, fixer-upper, or rental is a complicated decision. Even experienced buyers seek professional advice. A financial or mortgage advisor will have extensive knowledge of the current market and will provide valuable insights. It’s important to plan ahead for the future and discuss your goals with them. They will be able to help you choose the right path for you.
Property is normally considered one of the most clever investments you can make. This will depend on the market at the time, however. Shop around and do thorough research into the average prices of the type of property you’re looking at. Do the same with financing options. For the best advice, work with an independent financial advisor who will have the freedom to explain to you all the options available, rather than a restricted selection of mortgage products. Aim to get a wide comparison of the market before you decide.
Check out the local area
Once you’ve got an idea of the area you want to buy in, go and check it out. You can also do plenty of research on the local area online. Find out about the local schools, shops, transport, nightlife, and other amenities. If you choose to buy in an up-and-coming location ahead of time, this will mean a higher return on investment (ROI) in the future, if you sell.
Write a list of priorities
If you’re planning on living in the property yourself you should prioritise your wish list. Which local amenities are the most important to you? What kind of area do you want to live in? No property or location is 100% perfect so try to prioritise both your wants and your needs. These may include the size of the garden, vicinity to schools, public transport options, and so on.
Consider buy-to-let options
Buy-to-let properties are still considered a good investment, even with the latest tax relief restrictions. It’s not a decision to be taken lightly, however. To give you an idea of how it works, here is a quick guide to buy-to-let mortgages. If you are going to rent out your new property then you need to choose your tenants carefully. You will also need to consider whether or not to use a lettings agency. You may even have the option to invest in a property where a tenant is already present. In short, there are plenty of important factors to bear in mind.
Calculate the return on investment
All property purchases should be considered as an investment for the future. You can calculate the basic ROI according to inflation, the costs of running your asset, and the annual profits it makes. There are also ways you can boost the value of your investment if you plan on selling in the future. If you decide to renovate the property this is likely to increase its value considerably, for instance. Plan your budget in advance for home renovations and how these will affect the tenancy agreement if you’re renting. These are all factors you can discuss with your financial advisor or property expert.
Choose an energy-efficient property
Choose an energy-efficient property where possible as this will help to reduce the cost of your bills. There are several ways you can improve energy-efficiency, if not. You should also take into account maintenance costs. Newer properties tend to be more efficient and with fewer maintenance issues early on. They can always be teething problems with brand new builds, however, so you need to find out as much as you can about the structure of the property, plumbing, electrics, and who will be responsible for maintaining it.
Consider all the various alternatives
Before making a decision consider all the various alternatives available to you. You can opt for a rental property or a future home for your family. Bear in mind all the different types of property. As previously mentioned there are pros and cons of new builds, higher renovation costs involved in older properties, and differences in price and yield depending on the area. There are many factors to take into consideration before you can find the most suitable solution for you. Seek professional advice, do your research, and you’ll be on your way to making a more informed decision. Investing in your first property can bring many exciting opportunities and it’s an important step towards securing your future finances.