Are you considering starting your own property portfolio? As the government and the media constantly focus on the growing number of renters, it can seem like a great career opportunity or a second source of income. However, there is a lot more to becoming a successful property investor than simply getting a buy to let mortgage.
Being a property investor takes up a lot of time – so it’s not always a good idea if you haven’t got a lot of time to dedicate to market research and property management. Buy to let lending can be difficult to acquire without previous experience in the property sector, and being a landlord or paying a property management agency can be more expensive than you first thought.
If you’re wondering whether this is the right decision for you, let’s take a look at the pros and cons of property investment.
Pros of Buy to Let
Buy to let is a great investment choice, as having money in property is a tangible and reliable investment. Even if the market crashes, you can wait until house prices rise again to cash in your return. Here’s some other advantages:
Return on investment – this is pretty easy to calculate for investors and landlords. Find out the rental yield on each property before buying it, and you’ll be surprised at how much you could earn annually.
Funding options – banks are tightening requirements for buy to let mortgages, and further tax changes bring more bad news for landlords and borrowers. However, there are many other ways to secure funding for buy to let investment, such as alternative loans and peer to peer lending.
Cons of Buy to Let
After a series of government changes to the sector, buy to let isn’t quite as lucrative as it once was. Here’s some of the downsides:
Charges and tax – When buying and selling a property which is intended for buy to let, you’ll have to pay a much higher rate of stamp duty and other taxes. This should be considered when calculated the ROI.
Time and work – being a landlord doesn’t mean you can find tenants and relax. You have a legal obligation to keep up with repairs and maintenance, which will take time to organise and cost money to ensure is well maintained.
Becoming a buy to let property investor is hard work, but if you have the time to commit to the venture then it can be a secure investment.