3 things to consider when investing in property

Looking into the property investment sector, but unsure of where to start? A tactile, physical investment strategy that is typically long-standing, property often forms the backbone of many successful financial portfolios. If you’re interested in learning more about the developing property investment/real estate market, here are three things that you might want to consider.

1. How much can you afford to invest?

This is a crucial question that you should ask yourself before going ahead with any investment strategy. If you’re looking into this venture seriously then you likely will already have some amount of capital stored away, but property prices can vary wildly depending on the type of unit you’re interested in, and the area it’s in, too. 

Figure out how much money that you can realistically afford to put aside for the long-term, as property is usually a longer-standing investment and so your capital might be inaccessible for a long period when tied up in a bricks and mortar investment. Also, ensure that you have all of your other monetary affairs and commitments in order, before going ahead with something that you might not be able to comfortably manage.

Tip – When thinking about a certain type of property to accommodate your budget, you’re going to want to look at the amount of demand there is and weigh up some of the different benefits. There are a wide range of different property types to invest in, from student property investments, to care home investments and even hotel investments.

2. Which area is going to be the most lucrative?

Once you’ve figured out the amount of capital you can afford to put into an investment strategy, and you have a specific type of property in mind, it’s crucial that you also put your money into the correct area. One that’s not only going to ensure demand due to popularity and potential tenants (if renting out/selling down the line), but that also has longevity and promise for the future. It’s no good investing in an incredible property if there’s nothing of interest surrounding it.

If you look at the UK property market, for example, award-winning company RWinvest state across many of their guides online that Liverpool is statistically one of the best cities in the country at the moment. Not only are the rental yield averages among the highest in the country, but with the mass amounts of regeneration and growth going on in the city – in projects such as the waterfront redevelopment and the Everton football stadium – it is sure to be a popular destination for years to come. Manchester is another notable northern city that has enjoyed a similar story of success in years prior, and is continuing to do so.

3. Are you interested in a hands-off strategy?

If you are someone that is concerned about the time commitments required to run and sustain a successful investment portfolio, you might want to consider instead a hands-off strategy to ensure things run smoothly. As an example of how this works, many apartment buildings and complexes throughout cities will have dedicated, on-hand management companies in order to deal with day-to-day issues, and also ensure each unit is maintained and tenanted.

Some investors decide to pay a small percentage fee to these companies each month, focusing instead on their primary job or projects and leaving dedicated teams to handle investment tasks. This is a standard sort of practice if you’re purchasing a property for buy to let purposes – meaning that you’re letting it out to a tenant and receiving a regular rental yield payment – and with the money made from rental fees, you can still stand to make a healthy regular source of income.