When it comes to investing your money, a lot of people like to suggest buying property as a way to diversify where your money is being held. And a lot of o people also suggest taking on tenants so that your properties don’t lie empty. But what do you know about being a landlord? Here are some things to think about before you become a landlord.
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Long term commitment
When you buy a property, it can be a long-term commitment, especially if you are wanting to invest your money into a property portfolio. Keep in mind, investing in property is not the same as flipping properties. Flipping a house is the act of buying a property that needs a lot of work, doing the renovations, and selling it one for a profit. If you are investing in property, you may not see a profit for around 10 years. At the same time, your property could be someone’s home. If you decide to sell your property at some point, you could end up making a family homeless in the process.
Having tenants
If your property is going to lie empty, you might consider having tenants. As we mentioned in the point above, your tenants could end up making your property their home so you may want to think twice about selling it if you have long term tenants. On the flip side, if you may run the risk of tenants treating your property horribly and causing damage. You will need to ensure that you have all of the relevant insurances and checks carried out so that your property does not get damaged or can be repaired if it does. You should also ensure that the property that you are buying is in an area that is desirable for rentals. Checking with an estate agent such as william pitt sotheby’s can help you make an informed decision about the best areas for tenants.
It’s also good to differentiate between residential and commercial tenants. The latter is best managed using an excellent commercial property management team that can help you with the listings, ensure the general maintenance of the property is communicated, and that the contracts are correctly ironed out beforehand.
Mortgage or buying outright?
If you are in the position to buy your house outright, it can be a great way to invest your savings in a long term commitment. However, many people believe that they should invest in property with multiple mortgages. There are several issues with this plan as you might become victim to the changing interest rates and market fluctuations. It is also worth noting that a Buy to Let mortgage nearly always has a higher repayment amount than a traditional mortgage. As tempting as it might be to lie on your application in order to get that cheaper rate, you could be prosecuted for fraud.
As you can see, there are a lot of things to think about before letting your property out for other people to use. If you are prepared to take on the financial commitment that is involved, you should speak to your financial advisor and bank to see if it is a good decision for you. If you don’t want to have tenants in your properties, you could always invest in a few holiday homes for your family instead.