Property investment is one of the most lucrative business fields nowadays. However, investing in real estate is a big decision that has to be made carefully. Your success in this market solely depends on hard work and devotion. Did you finally decide to venture into property investment? Good for you! As you might have already heard, UK's property investment industry is massive. Most regional cities are thriving, and because of that, new players join the table every day.
So, as you begin your search for investable properties, expect a high level of competition. Nevertheless, this shouldn't dampen your hopes. Also, you should avoid listening to naysayers who come up with conspiracy theories such as;
- "Property investment is for insanely rich people whose bank accounts are barely affected by losses."
- "Without luck, your money is bound to go down the drain."
- "The best investments are already gone."
However, you should note that the journey isn't for the fainthearted. Don't assume it will be a picnic! You need to put in the effort to make it work. Once you overcome the formidable hurdles involved, you could make it to Forbes' list of the wealthiest property investors in the UK. This will take time, relentless hard work, and persistence.
That said, let's go through some of the advantages you'll enjoy once you find your footing in the UK's property investment scene.
Pros of Becoming a Property Investor
This is an obvious benefit. Everyone is out to create a steady source of income, and real estate property investing presents you with an opportunity to achieve this goal.
Property investment allows you to enjoy a steady income, especially if you have tenanted your building. Several factors will determine how much you receive at the end of each month.
One of the most important factors is the location of your property. For instance, let's assume that you have properties in London and Ely. Those in the former are definitely going to fetch you more cash than those in the latter.
Make sure to select the location of your property wisely. Research the UK real estate market as this will help you make the best choice.
Building Wealth and Equity
We have all been here, desiring to accumulate wealth more than anything else. While property investment is not exactly a get-rich-quick-scheme, it can help build equity and wealth in the long run.
How exactly do you build wealth?
Well, property investors build equity as they pay down the mortgage. This allows them to purchase more properties and increase their cash flow. Over time, their bank accounts grow fatter, leading to the accumulation of wealth.
I've heard countless people cite this as to why they ventured into property investing, especially when they're doing it full-time.
Investing in real estate comes with tremendous freedom, even for beginners doing it part-time. It enables you to become your own boss. You get to make all the decisions regarding how your property is managed or sold singe-handedly. You also call the shots regarding additional properties to purchase and even tenants who will live in your building.
Being your own boss sounds excellent!
However, you should be wary of the responsibilities that come along with independence. Many pitfalls come with being at the wheel. Here are some tips you should follow to overcome these pitfalls:
- Manage your finances well/learn financial discipline
- Manage your time properly
- Associate with ambitious property investors like yourself
- Build a team to help you work on your property investment projects
Knowing all the perks of being a property investor is not enough. You also need to understand the risks involved.
Take notes. This information is handy.
Cons of Becoming a Property Investor
Lack of Enough Liquidity
Liquidity refers to the ease at which you can access the cash you have put in a specific investment. Despite all the lovely things about property investment, this aspect may discourage you.
Selling a property is not that easy. It takes time, plus you have to develop the perfect strategy to do it right unless you want to sell your building at a loss.
Before you make any move, ask yourself:
"How quickly do I need to access my money?"
If the answer is "all the time," then property investment might break your heart.
This is another risk involved in property investment. Your buildings are susceptible to damages that could derail all your future investment plans. Your property could be earning you millions today but be razed to the ground by a fire tomorrow.
Tenants might also destroy your property due to their negligence. Furthermore, natural disasters such as earthquakes could render your investments worthless.
To deal with this risk, you could protect your property with the appropriate insurance policies. This way, should any of the factors mentioned above damage your property, you will not bear the burden of loss alone.
Imagine purchasing a property, thinking about all the big you have when the profits start coming your way, only to have it repossessed. It can be devastating. With property investment, this is possible if you are incapable of making the required monthly mortgage repayments.
The smartest plan here is to make sure your financial situation allows you to keep pace with repayments after buying your property. Otherwise, things could get ugly.
Before you embark on your property investment journey, think about some of these threats that could negatively affect your dealings; how you can successfully navigate them and succeed eventually.
After you're sure that you can effectively deal with the risks involved in property investment, consider using a property strategy that suits you. Let's look through some of the most popular strategies nowadays.
- Buy to Sell
This strategy, which some people know as fix-and-flip, involves buying a property, renovating/ refurbing it, and selling immediately. It is ideal for traders who want lots of money in returns within a short while.
- House of Multiple Occucaption's
Houses of multiple occupations (HMOs) involve an investor letting out individual rooms to numerous tenants instead of the whole house or flat to one tenant. This property investment strategy suits those who want to maximize cash flow or their monthly income.
With this property strategy, the real estate investor looks for a contract from a property seller and resells it to an end buyer. This plan is excellent for beginners who don't cringe when the word "sales" is mentioned.
I hope this blog helps you grasp some of the things to expect as a property investor in the UK. Don't hesitate to conduct more research before you start making investments. With adequate industry knowledge and the required drive, seeing your property investment dreams to fruition should be effortless.