Magical Penny

Getting on the property ladder can be a goal for many.

Having your money being spent on your own mortgage, rather than someone else’s, is what it is all about. You are investing in something that is yours, and you can sell it at any point should you need to. But there are other costs that come with owning a home that you won’t necessarily have if you are renting, depending on what your contract is. So if you are looking to get on the property ladder soon, then there are some things that you need to take into account when making your calculations. Do you know about all of these extra costs?

Council Tax

Unfortunately, not all council tax is created equal. So even if you have been paying council tax in your rented property, will the council tax band of your new home be more expensive than it has been previously? If it is a larger home and definitely has more bedrooms than before, it will be in a higher band. So as part of your mortgage calculations, you need to include the council tax with it. Can you make the extra repayments each month?

Energy Bills

If you are moving into a new build property, then the chances are that your energy bills will be quite low. Compared to an older home, a new home will be well-insulated, warm, and much more energy efficient. So your bills could be less than before. Again, this is something that you can check with the estate agent as they have energy rating details. However, if you are going to be moving to an older and larger home, then your energy bills could rise. It isn’t the end of the world, as long as you’re on the best tariff. So check an energy provider comparison site like http://selectra.co.uk/, to see what tariff will work out best for you. If you can get locked into a reduced rate for a couple of years, then that can often be the best way to go.

Maintenance Fees

Generally, this will only apply to flats, as someone has to take care of the communal areas, staircases, and lifts. So often there is a yearly maintenance fee for the property. No doubt you will get told what it is when you are looking to move. But make sure that you are checking your finances and working to a budget. There is no need to get into debt for something like that.

Parking Permits

In places like London, you need to pay for a parking permit to be able to park on the street that you live in. Quite crazy, but you can see why they do it. Would this be the case on your new home? You can always check on https://gov.uk/parking-permit if you need to. Weigh up the options of paying for it versus using other streets closeby. It can save you money to do the latter but may end up being more hassle.

Have you got any other considerations that you would include in the list?

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Owning and living in your very own country retreat is the dream of many people on the property ladder. But actually getting your finances sufficiently organised to get there can be a challenge. What you want is to have your own plot of land that can freely explore and roam, but that, of course, comes at a price.

The following are some financial tips designed to help you get the money together you need for your escape to the country. Here’s what to do.

Look For Cheaper Locations

There’s a premium attached to living in some parts of the countryside, especially areas inside national parks. However, in places just outside, often with equally stunning surroundings, you can get a lot more value for money. Look for properties with substantial land in the border areas to national parks and nature reserves to get the rural setting you want without having to completely empty your bank account. Click to view more information.

Use Saving Tools

The great thing about digital technology is that it gives you unprecedented control over your finances. With a click of a button, you can categorise all your spending and figure out where your money is going,

Download an app like Mint (if you’re in the US) and take a look at your standing orders and subscriptions. Is there anything you’re paying for unnecessarily that you don’t need that could get in the way of your plans?

Also, start investigating the return on savings accounts. Though it might seem pointless to put your money into an account at a rate of 0.25 percent, rates do vary substantially. It’s far easier to get the money for a deposit when you’re earning 1 or 2 percent interest a year on your savings.

Look Into Shared Ownership

Sometimes buying outright simply isn’t an option. But thanks to some clever thinking by those in the property industry, you no longer have to if you want to live on your own property. Instead, you could opt for shared ownership. Under these arrangements, you continue to pay a mortgage, but only up to a set proportion of the home’s total value – usually 50 percent. Then you pay rent to cover the remaining balance. Although it might not be ideal for people who want to own their own castle, it’s a great solution for those who just want a country lifestyle.

Wait For The Next Recession

Do you remember the last downturn? In some parts of the country, house prices fell by more than 20 percent. The same will happen in the next. According to the Case-Shiller index, the current ratio of house prices to median income is at historic highs, just like in was in the summer of 2007. This is evidence that house prices will almost certainly fall if there is another downturn in the next few years. Moreover, home prices usually go down anyway as more people foreclose and a greater number of properties suddenly find their way onto the market. As such, if you’re able to wait, you might benefit substantially.

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We’ve recently mentioned both the pros and cons of investing in property. Since the factors are tipped in the formers direction rather than the latter you might find yourself motivated to start investing and selling the property. But what’s the most important piece of the puzzle?

What do the majority of investors forget when they are selling or renting homes?

The buyer matters the most. Or, to put it another way, the customer is always right. You need to do everything in your power to make sure that when you have a buyer or potential renter on your hook, they don’t slip off.

Sell The Dream

You need to make sure that you are ready to sell the dream when you are investing in property. It’s important that you can show buyers what you’re selling is exactly what they want or need. That might be for personal reasons or for investment decisions of their own. As such, you have to understand your target buyer, but you also need to think about your presentation.

There are many ways to present the dream to potential buyers. For instance, you might be pushing them to invest in a property that isn’t fully realized yet. If that’s the case, technology is the key to getting them to sign their name and agree to buy. According to https://www.metropix.com/, it’s possible to create floorplans for a property and let buyers take a virtual walkthrough. This can be an incredibly immersive experience and might be all you need to make sure that your buyer is ready to invest.

In other cases, it will be the little details. A lot of investors believe the buyer is purchasing the building, so the style doesn’t matter. They are, but the style still matters because you have to show them what the building can be, rather than what it is now. Trying to sell an empty shell is a long process and one that often results in lower profits.

Getting The Right Representation

You might work for yourself selling the property. That’s one option, and if you know that you or your business partner is charismatic, that could work out well for you. You can find out more about what makes a great salesperson on https://blog.hubspot.com. But if you don’t have the salesperson’s smile you might want to consider an alternative route. You can instead think about hiring a company that will represent your sales. But you do have to pick the right one. Don’t opt for the cheapest service because they probably won’t be able to provide the results that you need.

You need to make sure that you like the representatives and the staff of the company you choose to use. If you don’t warm up to them, why would you expect your buyer to be any different?

As you can see then, there are at least a couple of factors you will need to consider if you don’t want to lose a buyer interested in your property. Mainly though, it is about making them feel comfortable and showing them what the property could be for them, rather than what it currently is.

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Investing in property is something many people are interested in, and for a good reason.

Making the right investment can net you a small fortune. However, there are risks involved. You need to ensure the property is up to scratch for starters to ensure you aren’t investing in a potential money pit. Then you need to consider your personal circumstances. Do you have the finances to invest in, and develop a piece of property? You then need to work out what you want to do with the property. Are you looking to rent to others, such as buy to let student properties, or are you looking to invest for personal use? Planning is clearly required.

To help you, we have compiled a list of pros and cons why you might choose to invest in property.

Beginning with the pros.

Safer than investing in shares

Compared to investing in stocks and shares, investing in property is less of a gamble. Provided you have bought a building worth living in; you can generate a sizeable income. You will need to commit to research online, and if you are buying to rent, then you should choose the location carefully. You can buy something cheaply, and fix it up to net yourself a profit if you choose to sell it later, or rent it to others.

Banks favour residential investors

As property is a safe investment, there should be little trouble raising the capital, provided you have a good credit record. Banks will offer you a lower interest rate when investing in residential property, but you should still shop around for the best deals.

The house is yours

Whether you choose to live in the house or not, it’s yours! You can do what you want with the place, and in many ways you are investing in the future. You can buy and develop a property for you to move into in the future, and you can leave it to family in your will. When you rent, you can set the rates, and can easily control the income you generate.

Property prices are growing

For the moment at least, but you do need to keep an eye on the property market. In the meantime, you could feasibly buy something worth around £200,000 and see the value rise at the current rate of around 5 or 6% each year. The work you do on the property can also raise the value considerably.

Immediate cash flow

Should you choose to buy to rent, you can guarantee an almost immediate cash flow. There is a high demand for rental property in the UK, so provided the property is well maintained, you will have a line of people waiting to move in. Of course, you will also need to be a good landlord, so while you can make a profit in line with inflation in the rental market, you don’t want to fleece your tenants out of their money. Ultimately, you are creating a positive cash flow, giving you the means to pay off your mortgage, and other expenses, through the rent you charge on the property.

Leverage your investment

Leveraging your investment is easy. You put down a deposit, and the bank will give you the rest of the money for the property. You can maximise the return on your investment when the house appreciates in value. For more about leveraging, read the useful advice here.

And now for the cons.

Not a liquid investment

It can take a long time for a property to sell, so if you need to access the money from the sale quickly, you might be out of luck.

Hidden problems

You may have done your homework and had the building inspected before buying, but there will always be a hidden problem down the line. Disaster might strike due to the weather, and you will need to pay for damages. You will be liable to pay for unexpected bills on the property before tenants move in. You will also need to chase up rent payments if your tenants are not the most reliable people on the block. You need to account for the possible risks involved and find ways to protect your asset.

Entry level costs

It can cost you a small fortune when you are trying to make a step-up on the property ladder. Property prices are continually rising, which is fine when you want to sell, but not so easy when you are trying to buy something. If you don’t have the money behind you, for your personal life as well as your investment, you are going to struggle.

Problems with tenants

Buying property is a huge investment, and if you are relying on the income from your tenants, there are many risks involved. For starters, they may cause damage to your property which will need to be paid for. They may be late with their rental payments or may move out without notice, leaving you with an unexpected vacancy. You will struggle to make your own repayments on the mortgage, so you do need to have extra money set aside to account for a shortfall. Then of course, there is the emotional stress that bad tenants can cause. You want to rent to decent people, so make sure you run background checks, such as collecting references before letting anybody move in.

Ongoing costs

For as long as the property is yours, you are liable for ongoing and additional costs. The list could be endless, and these might include council rates, renovations, maintenance, insurance costs and more. Again, you need to prepare for this eventuality before deciding to invest and remember that some of these costs will come when you least expect them.

Bottom line

Those are just a few of the pros and cons you need to be aware of when it comes to investing in property, so hopefully, we have given you a little insight into the reality of the situation. Do your research, speak to the experts, and take stock of your life. You can make tidy income from the investment, but it pays to know the risks involved.

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