Is it Good to Invest in Property?

There are many different places to invest money but there are a lot of people that will use their money to invest in property. This is something which has started relatively recently due to the stock market not performing quite as well and because of a trust in banks, pensions and other types of investments. There are pros and cons to investing in property though and it is good to have an understanding of these before going ahead with it.

Return

With a property there are two ways to make money from it. Most properties will increase in value over the years just due to the fact that house prices tend to rise with inflation. Although, this may not always happen, it does generally. If you are unlikely enough to pick a house in area that becomes undesirable, a style of house that falls out of trend or one that is in disrepair, then you could find that the value will go down. However, most houses will go up in value and this means that you are likely to be able to make some money when you sell.

You may also be able to rent out the property. You could get in a regular tenant to get monthly rental or let it as a holiday home and you have more seasonal guests but the rent that you can charge tends to be higher. This will provide you with an income stream as well so it means that you will have money to cover the costs of home ownership but you will have to pay out to keep it maintained inside.

Costs

There are always costs of owning a home, whether you live in it, leave it empty or rent it out. These include maintaining it inside and out, insurance, council tax and if you rent it out, you will also have to have safety checks done on it and pay for it to be decorated. You may also have letting agent fees if you do go through an agent. It may also be the case that you will have to pay for it to be modernized or updated every so often as well. The amount of maintenance will probably depend on the age of the house. An older property may need more work doing to it.

Buying & Selling

When you buy a property there will be costs, such as stamp duty and solicitors fees. You may also have to do some decorating or perhaps even more expensive work to update it. Then if you are renting it out, you will need inspections and safety checks to be done and pay for insurance, before you can pay a letting agency to find you a tenant.

When you sell a house, you will have to pay an estate agent and solicitor. You will also have to pay capital gains tax on the money that you have made on the increase in the value of the home, if it is more than the threshold for the tax.

So, as you can see, you will need to think about the costs and the potential returns on a property in order to decide whether you will be able to manage financially with a property. It can be hard work as well, as you will have to deal with tenants and any emergencies that they have and if the property is empty for a while, you will have no rent coming in. So it can be quite a gamble and it can be well worth talking to people with experience of being landlords to find out a lot more before you go ahead with this sort of investment.

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