Property investment has long been a dependable way to invest our wealth. An old saying goes something along the lines of, 'nothing is safer than bricks and mortar,' which can be accurate; however, we must be aware of some issues that could affect the success of such as venture. Here is our newbie's guide to investing in property. It should not be considered a fail-safe for a successful experience but gives some excellent advice. As with any investment, judge each opportunity on its own merits and proceed accordingly.

What Type of Property?

There are a few different ways we can invest in property. We could be buying our own family home, a property to renovate and sell on, or even a rental property. As well as the purpose of our intended purchase, we should consider what style of property we should be looking at. Do we wish to invest in a high-value property? Alternatively, we could purchase several smaller and lower value pieces of real estate, lowering the risk by spreading our investment.

Location.

Location is a crucial consideration, as it will affect both the buying and selling price. If we are looking to rent out a property, the desirable areas may differ from those looking to buy. Classic areas for successful rental properties would include areas near universities, towns peripheral to large cities, suitable for commuting, or inner-city apartments themselves. We are looking to sell large family homes, then safe and vibrant communities near good schools and local amenities.

Alone, or With Partners?

Investing in property is not a budget option and can be a serious investment, taking up a considerable amount of our available capital. But we do not need to go it alone; there are various options for finding investment partners. If you have friends or family interested in investment, this may be an excellent place to start. There are even investment opportunities to make a small investment as part of more significant property investments as part of a peer-to-peer investment scheme.

Tax Obligations

If we are investing in property for profit, we should be aware of the tax implications. If we make a profit during a tax year, then tax will be due on those amounts. It may be a good idea to employ a specialist property accountant to make sure you are not paying more than you need to. There are ways of making the tax situation work in your favour; you can defer taxes due on the sale of a property if you are subsequently purchasing a "like-kind" property; full details can be found in this 1031 exchange guide for 2021.

How to Finance the Purchase

It may well be that we have a large amount of savings or have recently benefited from a large inheritance. But for most of us, we are not so fortunate, so we must find the best method of borrowing or obtaining the funds for our venture. The most common and obvious route is looking to take out a mortgage. We need to be aware of this situation because commercial purposes as a standard mortgage will undoubtedly be unsuitable, possibly even illegal. We should consider additional costs as well; if you are looking to rent the property out, there are landlord's obligations; you must have landlord's insurance and a buy to let mortgage. Check out this rental property calculator to work out your potential costs and profit in a realistic way.

Upgrades & Renovations

Upgrades and renovations are a big part of the commercial property investment world. Adding value to a property you intend to sell is a great idea, but we should be aware of the downsides. Budgeting is vital here, but as well as a planned budget can be, there is no guarantee that we will not face delays, cost increases, and other unforeseen problems. Where possible, we should ask for fixed costs, not quotes from contractors we hire. Look for good reviews or recommendations to find the best likely people.

Selling the Property

There are certain things to be mindful of when selling a property. You may want to consider waiting until all the work is fully complete before putting it on the market, as you can show it off in it's full; glory at that point. When choosing an asking price, we should be considerate of fees and costs that will come out of our profit. Real estate agents fees and local or national sales taxes, which vary depending on location.