So, you already have one property – that’s it, right? Wrong. You don’t have to stop there. Investing in more property is a fantastic idea as it means that you will have a stable fund of money for when you need it the most.
Property is one of the safest investments you will ever make. Sure, the market fluctuates from time to time, but there will always be money in property. If you can do so then, buying properties will mean that you can ensure that you and your family have a stable future together. The ‘buy to let’ scheme mortgage allows you to invest money in a home, whilst also letting that property out to tenants. That in itself means that you can be making money, whilst also investing in your future. Here is how the scheme will help you save money in the long-term.
Why should you invest in property?
So, why should you invest in property? That’s a good question. Investing in property isn’t about attempting to become some wild property tycoon. Investing in property means that you are investing in yourself and the future of your family. Look for homes that you can afford, yet will rent with ease. If you home search in the Canford Cliffs area, you will find that the property prices are reasonable. As a long-term investment plan, you need to find a home within your means.
What is a ‘buy to let’ mortgage?
When you get an average mortgage, the lender assumes that you will be living in your new property. A ‘buy to let’ mortgage is a little different. You will be buying the property with the intention to get a tenant in the house straight away. That means that you will be making a profit on your property from the moment that you buy it. If you already own a home, you can buy a second property and rent it out, which will help you cover the mortgage costs of property number two. This idea is an easy way to make a savings fund for you and your family. You must make sure that the rent value of the property is about 30% higher than your monthly mortgage repayments.
Becoming a landlord is easy
Becoming a landlord can be stressful, but only if you allow yourself to worry. In reality, becoming a landlord takes little effort on your part. Once you have your second property, you can pay a third party company to take care of all your housing duties. The fee might be large, but it means that should anything happen, somewhere else will be there to deal with the problem. You will have to go through a short legal process when you become a landlord, but after that all you need to do is sit back and relax.
Buying many properties means security
Having many properties means that you have security for the future. Forget having a retirement fund, with property, you can release equity whenever you should need it. That means that if you want a lump sum of money at some point, you can get your hands on it fast.
Your current property will help with your deposit
You can use the equity in your current property to gain a cash deposit for your second property. That means that you don’t have to go through the bank interviews and accountant chats before you can get your hands on a deposit. Doing so will mean that it will take you a little longer to pay off your original mortgage. It will also mean that you have two properties to your name. You must be honest about your intentions when you go and see a mortgage representative. Make sure that you explain what you plan to do, so that the experts can find the best deal for you.
I would urge significantly more caution with investing in property. I’ve been a landlord for a decade and it is a completely different ball game to other types of investment. One of the worst case scenarios is you get a nightmare tenant, who not only fails to pay rent and does significant damage to the property, but who also knows the law and drags out an eviction to a year or more. If you can’t afford to refurb a property and pay the mortgage for a year without any rent coming in, don’t go anywhere near BTL. I always get worried when anyone suggests a particularly investment is a guaranteed winner – it’s rarely that simple. The primary risk with BTL is the mortgage – negative equity, making the monthly payment, not breaching the terms, but there are other risks too – insurance risks, crime risks. Also bear in mind even with a really good letting agent there are many things they won’t help with – dealing with leasehold issues (in blocks), extending leases, refurbishments, bookkeeping, tax return.
Very interesting, thanks for your thoughts Nyul!