Once you resolve to tread the path to become a landlord, you start with the first step of buying a good property. Since real estate investment demands huge sums of money, we all need options of affordable houses for sale. There is not much respite when it comes to the prices of properties in the UK. As per reports by Nationwide Building Society, the average house prices in the country rose by a whopping 10 percent between November 2020 and November 2021. In April 2022, according to Office for National Statistics, the average price of houses in the UK was £ 2,81,000. This figure is £ 31,000 more than that for the same time in the preceding year. These investment property market trends point that finding affordable houses for sale can be a tough task for many. If you are planning on buying a house on a budget, you need to stay on top of such investment property market trends and seek guidance from real estate experts to streamline the task. Team RentOnCloud comes with some of the most pressing considerations that you should analyse when buying rental properties.
The topmost factors that you need to evaluate while buying a potential property are the location and current state of the property. Ideally, the property should be situated in a nice neighbourhood and must allow easy access to basic amenities like public transportation, grocery stores, schools, and hospitals. Most tenants prefer to rent properties with such accessibility. Again, when buying house on budget choose the location of the property wisely.
The condition of the property at the time of purchase is again critical to help you estimate future costs on repairs and renovations that you will have to incur. It is advisable to undertake a professional inspection of the complete property to figure out any underlying problems. A good bargain in the form of an old house may not actually be cost-effective if you end up sparing a fortune on reviving it. Find out if you can undertake the renovations on your own or you need to engage a third-party contractor for the same. There is a possibility of delay in such renovation projects that can lead to no rent periods for a prolonged time. You also need to decide between investing in a newly constructed house or opting for an existing one. New constructions tend to be costlier than acquiring a prevailing rental home. Examining a mix of all these parameters will help you find affordable houses for sale.
Taxes are an inevitable aspect of any investment proposition. You should evaluate the applicable amount of property tax when buying house on a budget. Steep property taxes can siphon off a big chunk of your rental profits. Usually, the property taxes in prime metropolitan areas tend to be much higher than the countryside and the suburbs. You might elect to explore for rental properties in such areas than outrightly finding one in the major part of a city. It also does not mean going for houses in remote areas without a decent neighbouring circle. You must weigh the overall costs and rental requirements before the final decision.
The next fundamental concern that you should consider is about the predictable cash flows you can possibly generate from the potential property. You must look into factors such as the probable rental income, the operating expenses, rise in intrinsic value with price appreciation, depreciation, and tax benefits. After accounting for all critical incomes and expenditures, you must have a positive cash flow over the long term to ensure that you can sustain your rental property endeavour.
We all cannot do away without an insurance for our property. They are your safety net but it does entail significant spending. When buying the buy-to-let property, you should determine the amount of insurance coverage you need and the resulting insurance premium that you have to bear. You should also look into whether the region that you property is located in is prone to increased insurance premium due to more probability of natural disasters like earthquakes or floods.
Another critical aspect to ponder when buying a rental property is the amount of administrative efforts, it shall require. You might either elect to take the rental property and tenant management responsibilities on your own shoulders or engage a property management firm. The cost of hiring such an rental administrative company also means incurring making a separate monetary allocation that can go up to 10 percent of your rental earnings. Firms also charge a distinct fee for screening and finding suitable tenants for your property. Thus, while contemplating the property you must buy, also figure out the amount of management efforts and the consequent costs that you will have to invest.
We are a client-centric and innovative platform for landlords and tenants to help them with multiple property related aspects. We offer services like assistance for finding the right buy-to-let property and landing good tenants along with property tax and accounting support. Make RentOnCloud your go-to property management partner.