There’s some conventional wisdom in the world of investment that property is one of the very best places to start. After all, it’s one of the more accessible large-scale investments that people can make thanks to the availability of mortgages. Not only that but it often involves a lot less risk than things like trading stocks because the value of properties, while they can fluctuate, are a little more reliable. However, don’t make the mistake of assuming that this inherently makes property and easy investment opportunity. As with all investments, it comes with its own share of challenges. With that in mind, here are some things to think about when deciding if you’re ready to start investing in property.
Cost
The first and most important thing to consider is that there are a lot of costs involved in the buying and selling of property beyond the obvious things like the mortgage. For one thing, you need to work with solicitors when you’re both buying and selling any properties, and if you’re in Scotland, you also need to factor in the need for a home report when you’re selling. All of these fees by themselves might not be that significant, but when you put them together, they can end up making your investment a lot less lucrative than it would otherwise have been. Make sure that you factor these kinds of things into account when deciding where to invest your money.
Time
The reality of investing in a property is that it’s not the kind of investment that you’re going to be able just to sit on. SOme investments are perfectly fine sitting out of sight increasing in value, but if you want to produce value from your properties, that involves work on your part. You need to ask yourself if you actually have the time to spend fixing up properties or dealing with tenants or doing any of the other time-consuming things that can so often come along with property investment.
What will you do with it?
Not only will it take up some of your time but you also need to consider what it is that you actually want to do with your investment properties. You’ve got a couple of options. You can flip the property, improving it in order to raise its value and then sell it on at a profit. Or you can rent it out to tenants which allows you to gain a continued income from the property. Of course, the drawback of becoming a landlord is that you will have to start putting in a lot more effort in the long term in regards to the maintenance of the property itself.
Another important thing to consider is that all investments involve risk. It would be nice to find a way to prevent that from being true, but sadly there isn’t. You need to make sure that, as an investor, you’re in a position where you can handle that risk. The last thing you want is for your investment not to work out and then to end up in some serious financial difficulty because of it.
