As the UK’s capital city, property in London is highly sought after. The rental rates are excellent for landlords, and there is no risk of waning demand. If you are ready to start your property investment journey, then investing in London is a perfect choice.
Here are some of the essential steps to succeed in investing in London property.
Why invest in property?
Property is an excellent way to diversify an investment portfolio. Tying up funds in a rental property means that you will have a tangible investment for years to come and security in the rising house prices. It is also a relatively simple way to invest with less knowledge of stocks and markets required to succeed.
Choose the location carefully
It would help if you did careful research into the various areas in London that you could buy an investment property. It would be best to find an area that has increasing demand so that you can be sure to find suitable tenants. Aiming to balance the house prices with the need for rental housing is crucial.
The area you choose will depend on the funds you have available. Few will be able to afford even a one bed flat in Westminster, so you should familiarise yourself with the cost of various properties throughout the areas you are looking at and the demand for different housing types.
Prepare for the risk and commitment
Any investment comes with risk. While that risk is typically lower with investing in property, you should still be aware of the possibility that you may lose money on your investment. It is crucial not to invest more than you can afford and familiarise yourself with the plan’s potential pitfalls.
Property ownership can be a long term, time-consuming commitment. As well as the process of buying a home, you will have the upkeep and ongoing management to take care of. It would be best if you were entirely sure that you can afford this for the long term before making any firm decisions.
Get your finances in good order
You will need to be in a good financial state to get a mortgage for an investment property. You should ensure that your debts are low and that you have the disposable income to make payments on an additional mortgage. It would help if you considered discussing your plans with your accountant to ensure that you are making the best financial decision.
Ensure the property is sound
Before buying a property, it is essential to ensure it is in good condition. You should undertake surveys of the property to identify any weaknesses or issues that may pose a problem in the future.
It is vital to take into account issues that London is particularly susceptible to. For instance, many properties in London are older, meaning they may have structural or safety issues that newer homes will not.
The drainage systems are under significant pressure in London due to its large population, so you should have a drain survey undertaken. Check out Drain Detectives for an idea of what you should be looking for in a professional London drain survey provider.
Seek out help and advice
You could consider asking for help and advice from other, more experienced investors. This is particularly beneficial if this is your first investment property. Discuss your ideas with friends and relatives who have invested similarly to get an idea of what you should be doing and what you need to avoid.
It would be best if you also got in touch with a property solicitor who will help you with the legal side of the purchase.
Be prepared for delays
Buying a property in London can take some time, just as it does throughout the UK. You should be prepared for the potential delays and try to have patience. You can prevent delays by ensuring that all your finances are in good order and by completing paperwork promptly. There is the chance that things may fall through, so keep this in mind when you start.
It is essential to stay positive throughout the process. Buying a property can be a complex and challenging process, so you should prepare for this and do what you can to not allow the stress to take over.
It would help to remember that even if one property falls through, there will always be others. You should avoid putting all of your eggs into one basket and have backup plans. You should try and see any mistakes or failures as a learning experience – after all, few of us will do something perfectly on the first try.
Renovate to add value
Once you have settled on a property, it is time to get it ready to rent. You might be fortunate enough to buy a property that is ready to go, but most often, you will find that some minor (or even major) renovations need to go ahead first. The better the state of the property, the more it adds to its value and, therefore, the rent you can reasonably charge.
It may help to research the different features that can increase the value of a rental property. A new kitchen and bathroom will go a long way to attracting tenants. If you have the funds, you could consider an extension to create additional bedrooms. This will be particularly useful if you hope to rent your property as a house share, a popular form of renting for young professionals in London.
The next step is to find tenants for your new property. You will want to ensure that you find tenants that will care for your property and keep it in good condition. It is also important not to discriminate against prospective tenants because of their race, religion or socio-economic background.
It may help to have a proper discussion with tenants before they move in. Getting to know potential tenants can help you identify if they will care for the home well. The regular employment and previous tenancy checks can also ensure you choose the best tenants.
Managing your property
You will need to plan for the future management of your property. If you are planning to manage the property yourself, you will need to ensure that you are close enough to the property to visit should your tenants need you. You could also consider having a directory of local tradespeople that you can use should something need to be fixed or replaced.
Hiring a property management company is a solution that many landlords choose. These will run the property, find tenants and be the middle man between your interactions with the tenants. This can be very useful for landlords who live far from their property or who have busy schedules that do not allow much time for property management.
Buying a property in London can be an excellent investment. It can set you up for your later years and allow you to retire in comfort. It would be best if you did your homework before making any decisions and ensuring that you have the time and money for the investment.
Preparation is essential to get the most out of the experience and ensure that you make the best investment for your future.