Money-Saving Tips for New Property Investors
Getting into the property market as an investor is a challenging but incredibly lucrative endeavour, if you know how to make the right types of investments. If you know how to make the right decisions, property investments can set you up financially for the foreseeable future. Here are a few ways you can save money while you’re making money.
Know where to invest
Understanding property market trends will help enormously in helping you decide where to invest in property. There are growth areas around the country where rental yields are higher, and these change continually, so it’s important to do your research so you can take advantage of capital gains. Cities such as Birmingham, Manchester, Newcastle and Edinburgh are all popular destinations for investors, with plenty of potential tenants and higher rates owing to the central locations.
Pay attention to average rental rates which will help you determine if an area will pay off your investment costs sooner and whether a property in that area is worthwhile. Vacancy rates will also help you identify areas that are in demand, so you can be sure you’ll always be able to find tenants. This can be an ongoing challenge for landlords, so having peace of mind that an area is consistently in demand will minimise the risk of an empty property.
Get professional advice
While it may seem counterproductive to spend money on professional services, specialists will be able to identify areas where you can make savings, whether that’s finding you the best mortgage deal or reducing taxes. Firstly, you should hire an accountant who can guide you through the process of purchasing the property and help advise you on setting up your investment portfolio. Depending on how many properties you’re managing, you could be dealing with large sums of money each month, so it can be an advantage to have an experienced accountant handle your finances for you.
An experienced mortgage broker will also help you get the best mortgage deal for your buy to let property. As mortgage specialists, Town & Country Mortgage Services explain: “there are now plenty of competitive buy to let mortgage deals around that are specifically aimed at the buy-to-let market, ranging from special offer buy to let mortgage deals to fixed and variable rate options”. In order to ensure you’re getting the best deal, you need to work with someone who understands the nuances between these options.
Shop around for insurance
Insurance is essential for landlords, protecting their property and the returns on their portfolio. However, many people wind up overpaying for their cover, so it pays to shop around. Insurance policy rates vary depending on whether the property is secured via window locks and alarms, the age and profession of the tenants, and what type of property you’re insuring. You can cut costs by checking what the policy you’ve chosen covers, so it’s not more or less than you need, and increasing your excess to reduce monthly premiums.
Determine maintenance costs
The age and condition of the property will affect how much you can expect to pay in maintenance costs, which will impact how good of an investment a property is. If you need to pay out thousands in repairs and renovations, is the property really worth the price you’re paying for it?
Compare the costs of an old property versus a new property – the former will be cheaper to buy, but may need more work, while a newer property will require less maintenance but will cost more to purchase. Extra features like a garden or a swimming pool may also seem like an appealing option, but these will cost money to maintain which will cut into your profits.
Investing in property requires plenty of research and planning, but when you choose the right property, it can provide great returns. Whether you’re just starting your property portfolio or you’re adding to existing properties, there are always opportunities to save money and boost your profits.
From choosing the location carefully to making sure you balance upfront costs with ongoing maintenance fees, and making sure you work with professionals, there are cost-saving measures that property investors should be aware of.