A quick guide to making extra cash with property investments.
If you are making some extra money, you may want to invest rather than continue to save. The reason for this is that interest rates on saving accounts are at an all time low. If you invest you have a better chance of making some more money.
Money that you can then save and put towards either retirement or a luxury holiday. Actually, you can spend it on anything you like but first you have to understand how property investment works. It is not as complicated as you have perhaps been led to believe.
There are two options when buying property and we are only going to talk about one in detail. The reason for this is that house flipping is quite simple. You wait for the market to be healthy and buy a house at a low price that was a bit of a fixer upper anyway. At that point, you have a property that you bought for a lower price than normal.
You then set to work making it look more expensive than it actually is and there are a number of ways you can do this. If you go down this route we recommend you spend very little on home improvements. Keep it as cheap as you can because that is the only way you will make a substantial profit through this form of property investment.
Once you have done this, you sell the property on at a far higher price than you paid. We are making it sound simpler than it is and it can be quite risky. If you can not sell the property on, you can get stuck with a rather expensive investment.
Your other option is buying to let. This might be a wise decision, and there are lots of experts who can help you. If you talk to a mortgage broker they will guide you on finding the right property to rent out. But, there are some considerations that you need to take into account.
First, understand that by buying to let you are taking on the responsibility of a landlord. Therefore, you will be held responsible for any and all the problems a property may have. This is why you should always make sure you have extra money in your bank for repairs and unforeseen problems when purchasing property.
You will also be responsible for any health and safety issues. It is crucial you get any property you are going to buy checked out to the best possible standards. You do not want to encounter any hazardous surprises down the line. Something to watch out for is older buildings that have been lined with asbestos as insulation. This has been linked to a rare form of cancer.
Second, decide who your target tenants are and buy the property based on this decision. The easiest options are families and students. Young couples tend to look for properties that are modern and stylish, but affordable.
They will be looking for a house in a neighbourhood where their future children can play safely. Students will accept the bare minimum as long as the property is well maintained and well looked after. You will also have the advantage of a guarantor if they end up not being able to pay the rent.
Lastly, when investing in property it is important to understand that the market rises and falls regularly. Do not try and jump out quickly if you hit a bad year for investment. Chances are next year will be far more lucrative.
We hope this advice helps when you consider investing in property and wish you luck on the market.