Advice on investing in property

I'm 22 years old and i work online self employed, I'm looking at way's to invest for the future.

 

I have a good budget of around £200,000+, and just wanted a bit of advice from landlords, is going into property a good way to invest.

 

With working online an income can dissapear in a instance, but easily started again. But now i'm looking into the future, i really need to have that brick and motar style investment rather then virtual (online) property.

 

Is it worth buying property to rent out? I already have personal pension plan, is there anything i can invest in without serious problems.

 

Nothing like stock etc.. as i have already alot in a few places due to my parents help.

 

i'm not sure where to go for advice, and very weary of been taken in by people wanting to rip you off

 

Any advice is much appreicated?

Buying into rental property should be a good bet. Buy wisely in popular areas, such as close to hospitals for nursing staff etc. and you will be almost guarenteed rental income for the majority of the year.

close to hospitals for nursing staff

Is a good one, as well as small flats for students (have his/her parents as financial caution + rent payers by DD, if you manage rentals yourself).

 

It's definitely a good time to buy, if you have the equity (but I understand banks are still much more cautious with BTL mortgages than pre-crisis, if a mortgage is required), as your buying price (currently still a good bit lower than pre-crisis) will pretty much define your return on investment for quite some time.

 

A useful (but not authoritative/binding) rule of thumb is the "Rule of 12": 12 times the annual rent should amount to the market price. Higher than that and your RoI might not be that good, relative to non-property opportunities. Lower than that and you're laughing.

Yes, i'd be dealing with rentals myself, and will take caution to who rents and payment methods.

 

The fund's i have are my own saving's, i'm not one for borrowing anything. I'm going to look around at a few auction places and have seen on the web a few auctions for houses that have been valued around the £25,000-£40,000 mark, would buying a fleet of these say around 5 property's around this pricemark be much more secure then buying one around £150,000 mark.

 

The only reason i ask is i need something more brick and motar and something that can be fell back on if certain thing's go wrong.

 

i'm not really too sure where to go for advice about this, i don't want to go to any investment places, where you get told invest in this and that etc...

 

i'm young so the investment is there to be made back in time, how i was working it out as if i invested £200,000 in 5 propertys that made a monthly rental of £500 each to make that £200,000 back would take 80 full months plus i will also have those assets, i'm not sure if that's how it works out with renting. but all will be paid by my own money.

how i was working it out as if i invested £200,000 in 5 propertys that made a monthly rental of £500 each to make that £200,000 back would take 80 full months plus i will also have those assets, i'm not sure if that's how it works out with renting. but all will be paid by my own money.

Figure longer than 80 months, as you will have running costs against that rental income. Higher or lower, that will depend on what the costs are and whether you can do some or most of what's required yourself (some you won't, such as CORGI-reg'd periodical checks and what have you). And don't bank on having 100% occupancy all of the time.

 

Landlord/Renting works just like any other investment, you factor what you put in vs what you get out and over what period, then compare against other opportunities (allowing for different levels of risk, extent of personal involvement required, etc.).

Thanks for the advice, will be taken on greatly. Do you know of any places where i can have a good read through about starting up as a landlord?

 

I'm a quick learner and something that is there for me to read through i can take it in much more quicker.

There isn't much anything that will teach you from a book. Like any business property is a profession, so you need to treat it as one and be prepared to really earn from experience.

 

First and foremost you must decide what expertise you already have and where the gaps in your knowledge lie. It is a tenants market at the moment and if you buy the wrong thing you may regret it for years to come. There are bargains around but there are even more people chasing them.

 

If you are using your own money you have some real flexibility. Vendors often have unrealistic aspirations of current prices and find it difficult to realise that the heady days of 2007 are gone. Even so, don't expect your £200k to go very far.

 

It is easy to underestimate the ingoing costs of purchasing and holding. Voids can be cripplingly expensive so you might need deep pockets. Be prepared. - we've had one commercial property empty for five years awaiting redevelopment at an annual cost of around £30k pa. Buying a property with a tenant is much easier but purchase price will reflect various things like lease length and terms. A safe bet will be reflected in how much you pay.

 

Both universities are very customer orientated and they will rightly do their utmost to ensure that you comply with their demands if you want to rent to students.

 

The private rental market is in flux at the moment. None of us is sure quite where it is going to drop in the next year or two so caveat emptor.

 

Remember that property is a service to your clients, not just a way for you to collect money. It's easy to be a slum landlord but difficult to be a good one. You won't make money by sitting on it waiting for the 'deal of a lifetime' but if you are motivated, honest and patient it can be rewarding.

Edited November 22, 2009 by Provesta

Hi Ant,

 

I started buying investment property in my mid 20's and im 31 now with 37 rental properties.

 

You mention those props at 25-40k which will probalbly seem good value however you need to think about 2 issues with those sorts of property

1) They generally need some work so you have to invest further cash and you will have them not earning rent while doing this. This could be fine as you may well add further value to the prop while doing this and be good in investment terms. You need to decide however if you have the time to manage this and do your full time job!

 

2) The tenant type for properties like that are not going to be professionals with great credit ratings! Therefore the management side may be more than you anticipated.

 

We have helped lots of people invest in property over the last 5 years, im proud also that we have talked a lot of people out of property investment as they were not cut out to have investment property.

 

If you are the type of person that can laugh at minor setbacks like a tenant running off with a months rent (which will happen eventually its just a matter of time) then go for it. If you have a heart attack if the curtains are not open on your property until 1pm every day then don't bother with property investment.

 

Ant please get in touch if you need any pointers Im also intrigued in your web business, what do you do?

Now is a good time to buy, but it is not as straight forward as people first think. Buy 1 at first and get it up and running. You will learn a lot from that, I did. The first house I bought, a terrace looked at first sight something I could after a clean up over the weekend, something I could rent out within a week of possession. Took me a month to put the property right and that was just the start of it.

 

If I buy an old property now, it must be run down and I gut it and start from the beginning. Apart from clean ups and and a bit of decorating between tenants its a case of collecting the rent.

 

Try landlordzone on the web, there are some useful businesses on there. Arla is another organisation worth considering for legal advice etc.

Avoid student areas at the moment. I have spoken to a few students who have said their rent has fallen this year as the owners of the many empty city centre flats compete for their business. They aren't exactly the "young professionals" who we were told would live in these properties but students seem to like living in the city centre close to the Uni's and the nightlife as opposed to the traditional student areas.

 

That situation is only going to get worse in the next year or two as even more flats come onto the market.

 

Good advice about areas close to the hospitals though.

Id agree with the above posts. Some areas are getting saturated with rentals. The best areas to buy an investment property and get it let are areas with low levels of rentals availible.

 

Most investors bought in the city centre and as a result you get too much supply.

 

As a letting agent Id rather have a property in an area like the Wyborn (just let one out on there in 4 days) than a city centre flat.

If anyone is considering a buy to let investment, my house is for sale as below. I consdiered renting it out myself, properties in the area are going for approx £550 per month.

 

http://www.rightmove.co.uk/property-for-sale/property-13535268.html;jsessionid=041F52C4D56C3A83389920A0BE7BF548?searchLocation=s122fd&useLocationIdentifier=false&locationIdentifier=&lastPersistLocId=POSTCODE%5E1380778&buy.x=50&buy.y=13