Investment Property Blog by David Coughlin » A to Z

A to Z of Property Investment I is for Inventory

Rachel — Fri, 01 Apr 2011 19:45:13 +0000

Our A to Z of Property Investment series has been exploring a variety of issues that property investors are wise to be aware of. So far we’ve covered issues from A to H, and now it’s time to look at I. As well as being linked to the all important issues of making a property investment and getting insurance, I can also stand for inventory.

Many property investors who are buying property for investment purposes intend to rent it out, either on a short or long-term basis as renting a property can provide a good return on an investment. For anyone who’s going to have tenants living in their property, it’s essential that you produce an inventory first, before anyone moves in.

An inventory is a detailed list of everything that you supply within the property and needs to be completed by all landlords, whether you’re letting the property on a furnished, part-furnished or unfurnished basis.

The inventory is useful for tenants, as they know what is and isn’t included in the property, but it’s also very important for you, the landlord, as it helps you keep track of items that are missing, damaged or have changed when tenants are leaving. The inventory can be used as evidence for tenant deposit claim issues and a copy should be signed and kept by you, your tenants and a letting agent from the start of a letting period.

As well as details of particular items in the property, it’s also useful to use the inventory to make a note of serial numbers, models and manufacturers of electrical and household goods, plus details of any existing scrapes or damage to items.

For more details on the importance of inventories, read our previous post, on how to create an inventory for your rental property.

Check out the other posts in our A to Z of property investment:

A to Z of Property Investing: H is for Home Improvement

Rachel — Sat, 23 Oct 2010 10:28:38 +0000

In the latest part of our continuing A to Z series of property investing we’ve reached H – and H is for Home Improvement.

When you’re buying a property purely for rental purposes, home improvement may not be at the forefront of your mind. But there are benefits to be had in looking at how the property could be improved.

For a start, changing the layout of the inside of the property, such as adding an extra room where bedrooms are particularly large, taking down a wall to create bigger bedrooms instead of two small ones, or adding a corridor to stop bedrooms linking together could all help improve the rental value of the property, which would be good news for landlords.

Improving the look and interior of the property through decorating rooms, or updating bathrooms or kitchens, can also increase the rental value that a property could achieve. What’s more, when it comes to selling the property in the future, then carefully considered improvements may well help to increase the resale value of the property too.

Whilst home improvements to a rental property are generally a positive move, there is a fine balance involved in getting it right. For properties that you will be renting out, it’s far better to work from your head, rather than your heart, and look for cost-effective measures that suit your budget and the needs of your tenants, rather than pricey or fancy decoration that may be more to your taste than anyone else’s.

For more details on how you could add value to your rental properties through home improvements, check out this previous blog post.

A to Z of Property Investing: G is for Goals

Rachel — Wed, 28 Jul 2010 07:56:00 +0000

In our A to Z of Property Investing we’ve reached G – and G is for Goals. If you’re involved in the business of property investing, then it helps to have goals. Goals give you something to aim for and a target to work towards and can help keep you focused through good and bad times.

When you’re thinking about what goals you may like to have, it helps to consider them in terms of short-term property investing goals, medium term and long-term goals. In the short-term, your aim may be to purchase and let two properties, keep them going well and see the value on the properties rise. In the medium term, you may be keen to buy another two properties, to double your earnings. In the long-term, your goal for the future may be to build up a property portfolio of 20 or more properties.

It goes without saying that most people aren’t in the position to pop out and buy 20 properties outright – it takes time, commitment and effort to build up to that stage. If you were just starting out and only had one goal – to own 20 properties – it may seem rather far off, so having smaller goals along the way can help maintain your motivation and give you other, more achievable, milestones to reach.

Other smaller goals can be set on a monthly, half-yearly or yearly basis and can involve anything from putting a certain amount of money aside for future investments, to gaining new tenants for your properties. If you want to be reminded of your goals, then some people find that writing down your goals or sticking a copy of them up where you’ll see them regularly, such as on a noticeboard, can help them keep focused.

If you’ve not stopped to think about or plan out your own goals recently, then why not have a go now? We’re over halfway through the year, so you could use the latter half of this year to set some small, achievable goals and see how you get on. In January 2011, you could review how you’ve done and then set yourself some new goals to work towards next year.

Not all goals work out as planned, particularly if they’re affected by the wider economic situation, and there may be times when you have to go back a step or two before moving forwards again. In the case of long-term goals, your eventual goalposts may change over time, or you may wish to revise your aims.

Whether you stick to your goals completely, or find them changing over time, having the ideas mapped out in the first place can be very useful and, if nothing else, will give you ideas and information to look back on when you’re reflecting on your property investing career.

Catch up on the other instalments in our A to Z of Property Investing series:

A is for Appreciation
B is for Buy-to-Let
C is for Contracts
D is for Deals
E is for Experience
F is for Freehold

A to Z of Property Investing: F is for Freehold

Rachel — Mon, 28 Jun 2010 18:13:58 +0000

We’ve now got as far as F in our A to Z of Property Investing and F is for Freehold. As a property investor, it’s always advisable to double check what type of lease the property you have has before you buy, so that you don’t experience any unwanted surprises further down the line.

When you buy a property with a freehold lease, you gain complete ownership of the land and all of the buildings that are on it. Subject to laws and planning regulations, you have the right to do what you want with the property. Most houses in the UK tend to have freehold leases, but many flats and apartments have leaseholds.

In contrast to freehold, a leasehold property is leased to the owners for a set amount of time and usually comes with particular terms and conditions that need to be met in relation to the property, such as paying an annual maintenance fee.

When you’re researching properties to buy and looking at the particulars of certain houses or flats, then it’s essential to get into the habit of checking to make sure whether it is freehold or leasehold. Although there’s nothing wrong with owning a leasehold property and many people successfully do so, some investors prefer to stick with stick with an area they’re familiar with and always opt for freehold properties above leasehold.

As with any property purchase, as long as you do your research carefully, read the small print and are always clear about exactly what you’re buying, then you’ll put yourself in the best position for buying.

Catch up on the other instalments in our A to Z of Property Investing series:

A is for Appreciation
B is for Buy-to-Let
C is for Contracts
D is for Deals
E is for Experience

A to Z of Property Investing: E is for Experience

Rachel — Mon, 31 May 2010 20:24:01 +0000

In our A to Z of Property Investing series, we’ve reached E which, amongst other things, stands for Experience.

All property investors have to start somewhere and not everyone is blessed with heaps of experience in the first instance. Whilst experience is not necessary to get you started, it certainly helps as you progress with your investing career and many property investors will agree that they’ve learnt and grown from good and bad experiences along the way.

Sometimes the first step on the property investment career is with a property that happens to be available at the right price and at a time when someone wants to have a go at being a landlord and making money from property. It can be a good starting point, helping people get to grips with the basics of working as a property investor, but it’s only over time, when you learn about what works, what doesn’t and how you could improve on your track record that experience is gained.

Some of the common areas in which people typically gain lasting experience include issues such as:

Where to buy property
What type of property to buy
What type of tenants to aim for
Marketing a property
What rent level is realistic
When to sell
Using effective letting agents

What experience have you gained since starting as a property investor? Is there anything you know now that you wish you knew when you’d started out? Leave a comment and share your thoughts.

To help build up your experience and knowledge, then you’re in the right place, with property experts HBF Investments.

A to Z of Property Investing: D is for Deals

Rachel — Thu, 13 May 2010 08:18:53 +0000

When you’re working as a property investor and trying to make a profit on your investments, it’s only natural that deals will form part of your success. So it’s not surprising to hear that in the latest of our A to Z of Property Investing series, D has to stand for deals.

Getting a good deal can make or break many aspects of property investing. In the first instance, paying the right price for a property is crucial, as it influences the amount of money you make back on it, through renting it out and, further down the line, selling it on. Being able to negotiate well and get a good deal is highly advantageous and is a good foundation for the months and years to come.

When you’re looking for a mortgage, shopping around for the best deal can help too, and if you’re decorating or renovating a property ready to let it out, then it’s useful to negotiate deals with tradesmen and builders, wherever possible. If you have other properties in your portfolio, then offering the potential of additional work can help clinch that crucial deal.

There are deals to be had with managing your properties too. It can make life as a property investor and landlord a bit less stressful to have your properties managed by a team of experts and, whether you’re a first time landlord or have a string of properties under your belt, you may well be able to crack a good deal with a property management company.

The ability to negotiate a fair deal that keeps everyone happy will crop up time and time again when you’re working as a property investor. If it’s not your forte to start with, then learn to become a better negotiator, as it could have a very positive effect on the whole realm of your business.

A to Z of Property Investing: B is for Buy-to-Let

A to Z of Property Investing: A is for Appreciation

A to Z of Property Investing: B is for Buy-to-Let

Rachel — Fri, 26 Mar 2010 10:04:08 +0000

In the property investing world, buy-to-let is a buzzword and concept that you can’t fail to miss. In fact, it’s the crux of the business for the majority of property investors.

The idea of buy-to-let is pretty self-explanatory – you buy a property at a good price and let it out to tenants, giving you a regular income on the property. Not only that, but the hope is that when you come to sell, the property will have risen in value, giving you a tidy profit. It might sound easy – and this has surely tempted many people to have a go at buying-to-let – but it’s not always as simple as that.

For example, there’s the small matter of finding the right property to buy and getting it at an affordable price. Any old property won’t do – you have to select the right type of property, in the right area and market it towards the right type of people in order to stand a chance of being successful. If you get any of these factors wrong, you may find yourself stuck with a property that you can’t rent out, which will be costing you money. This is the point at which many hopeful, or amateur landlords, get disheartened and give up on the idea.

Serious investors, however, are usually more aware of the importance of market factors and, in theory, should have done more research before purchasing a buy-to-let property. They’re not immune from the odd buy-to-let purchase mistake, but are usually more prepared to learn from their mistakes and move on to the next investment.

As well as describing a type of property purchase, the term buy-to-let is often used for a type of mortgage option. In the height of the property surge, buy-to-let mortgages were very widely available, with many great deals available to tempt people. Although still an option, the choices have somewhat narrowed, but this has helped weed out the ‘having a go’ investors, and given more room to the serious buy-to-let property investors.

A to Z of Property Investing: A is For Appreciation

Rachel — Thu, 18 Mar 2010 09:12:16 +0000

There are all sorts of issues involved in successful property investing and in this A to Z guide, we’re going to be exploring some of them. To kick things off, A is for appreciation.

In the property investing world, appreciation refers to the positive effect that occurs when you invest in a property that goes up in value over time. It should be the goal of all serious investors to try and achieve good appreciation on their properties, not least as it increases the chance of making a profit when the time comes to sell.

The appreciation factor isn’t something that can be controlled easily – if only it were – but you can increase your chance of getting a property that will appreciate by putting careful thought into your property purchases. Some of the market factors that influence appreciation include supply and demand. As our property hotpot series has been exploring, buying in certain areas can help harness the demand for your property, if it’s in an area that is particularly popular and where there’s currently an undersupply for rental homes.

Inflation can also help property prices appreciate over time and so too can making improvements to your property. These need to be weighed up carefully, to ensure that the improvement will add long-lasting value and they’re particularly beneficial if you can also add extra value for rental purposes too. Improved bathrooms, kitchens and extensions are all common improvements that can make a significant difference.

Overall, if you’re a serious property investor, then the issue of appreciation should be firmly on your radar and you should keep aware of market factors when making business decisions.