· Building Equity – With purchasing and investing in property, you can start to build equity. As you pay off your mortgage, you build equity as simple as that. By building equity it gives you the leverage, to purchase additional investment properties, and so your portfolio grows.
· Generating income – By investing in properties and renting them out, you will be able to generate a passive income. The properties should work for themself, paying the mortgage owed and providing you with an income.
· Potential to add value – Investing in run down properties and refurbishing them can add value to the property, when it comes to resale. Always be mindful or capital gains tax in this instance, especially when buying abroad.
Not all of us are fortunate to be able to purchase a property with a cash payment. Most people that invest in property require a mortgage. If this is the case always plan your expenses, and make certain that you can pay the mortgage with out assistance from rental income. There can be a high turnover of tenants, and there may be time periods where the rental property is empty. Failing to pay the mortgage could end up with you losing the property, or at the very least your credit rating.
When calculating your finances and monies needed to purchase an investment property, remember to include on costs such as –
· Taxes and charges
Always research the property that you intend to purchase thoroughly:
· Verify the legal situation of the property
· Get verification of dwelling certificates payment of utility taxes and costs and an energy certificate
· Is there a lien on the property (Unpaid bills)
· Check that there is no planned development in place that may harm the value of the property
· Research the value of other properties in the area
Updated 27th Feb 2023