3 property investment mistakes to avoid
The 3 most common pitfalls of property investment
Although there is certainly money to be made in the property market, it has never been as simple as buying then letting. In fact, as with any investment choice, there are a number of easily avoidable errors that can put any effort at risk unnecessarily. So for any first time buyer, or any investor that is planning to build on a small existing portfolio, here are the three most common mistakes that every investment property buyer should avoid:
Mistake 1: lack of research
Before buying a washing machine or a television, most people research the makes, models and comparative benefits of each in order to decide which is the best choice. The due diligence before investing in a property should be even more rigorous: the local area demographic and reputation, the construction quality and maintenance requirements, the regularity and reliability of nearby transport links, the easily achievable rental yield and anything else that might impact the long-term profitability of the property.
Mistake 2: underestimating expenses
Although there are a number of standard expenses implicit in owning a rental property, many investors seriously underestimate the volume of costs associated with long-term profitability of any buy-to-let investment. Even if the property is let unfurnished, the inbuilt appliances – such as kitchen equipment, radiators and boiler – as well as the costs incurred by the legally required annual maintenance of the household utilities, building insurance and other coverage. If there are gardens, common stairs or any other communal areas, there will be charges that cannot generally be passed to a renter that must be met.
Mistake 3: neglecting to delegate
Many buy-to-let investors think that they can save money by doing everything themselves: this is a short-sighted choice that may well cost them dear. Every business benefits from expert help, and a property portfolio should be considered no differently. At the very minimum, a list of on-call experts should include a solicitor, a surveyor, an accountant, an electrician, a joiner, a plumber and a gas engineer.
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