Member Article

Key tips for smart property investments

For those able to find the required deposits being commanded by lenders, it’s a buyer’s market, says Ajay Jagota.

But the managing director of KIS Lettings and an experienced landlord has some words of advice for anyone looking to invest in property and enter the private rented sector.

Ajay said: “As with any investment vehicle you need to know what you want the property to do for you.

“You’re either in it for the long term and look for a high yield – the difference in what you’re paying for the property and the rent charged, or you purchase property where you feel there will be high capital growth and sell to make a profit.”

Ajay, who has more than 15 years’ experience in property management, shared his investment tips.

Budget

Before doing anything seek advice from an independent financial advisor to find out your buying limitations and what finance you are likely to have access to. This should enable you to set an upper limit on your property purchase. Take into account changes that might occur with interest rates and maintenance costs.

Add value

If you can buy below market value and add value you can create a very healthy cushion. Should the property price fall you have already created some equity.

To add value look to:

* Add rooms

* Improve kitchens and bathrooms

* Create more floor-space by extending the property

* Rent individual rooms (though there are strict rules on houses with multiple tenants)

Research

Do as many things as possible to ensure you’re buying into a strong investment. You can’t control interest rates and property prices. But if you don’t know the local area, speak to a letting agent in that area, find out about any planned changes. Employment, education, transport links and developments in surrounding areas all influence selling and renting power. Also find out what kind of tenant you can expect.

Conversions and renovations

First time investors might want to avoid taking on too much and many will avoid big projects. Anyone taking on a property which requires structural work should take with them an experienced builder, architect or both. Commercial to residential conversions can be attractive investment projects. Commercial property that already sits within a residential setting, such as corner shops, tend to be favoured by planning authorities.

Avoid auctions

Inexperienced landlords should never go to auction without a practised investor. There’s too much of a chance they will get carried away and over-bid or if they don’t get the property they have gone to purchase there’s a temptation to bid on other properties that they haven’t have done their due diligence on.

Ajay added: “Property is a great investment and has outperformed all other investments over the past 100 years. As long as anyone new to the private rented sector does their due diligence and ensures they make a smart purchase, there’s opportunity to make an ample return.

“However, I’d urge anyone to look at 10 or even 20 properties per week for a month or so to make sure they see the range of opportunities and buy what is right for them. Do as much research as possible and consult a trusted letting agent.”

This was posted in Bdaily's Members' News section by Ajay Jagota .