The first thing to say here is that all forms of property investment carry risk. There is no such thing as a risk free investment. But there are strategies that are less risky than others. Whatever you do it pays to have an inquiring mind and do your homework.
Buy To Let Option
This is becoming increasingly popular as a low risk property investment strategy. Here you will invest in a property with the intention of letting to one tenant or a number of tenants. Financing for such a strategy is often easier to obtain than it is for buy and resell strategies.
The important thing here is to ensure that the rental demand in the area is high and that the rents that you will earn will more than adequately cover the cost of any loan repayments and property maintenance costs.
Renting is in very high demand in a lot of UK areas right now so you need to know which areas to purchase a property in and where the general rent prices are strong. If you fail to do this then you could end up losing a lot of money.
Find out from letting agents what the demand is and the prices that are being charged for rent in the areas of your choice. Some letting agents will have waiting lists which is obviously a good sign. If you intend to use a property management company then shop around for the best deal.
Take The Long Term View
It is better to take a long term view with property investment than a short term view. Buying and selling property takes time, and if you go for this strategy you will want to minimize the time that your property is sitting empty.
It is better to take at least a 10 year view on your investment. Going for the buy to let option lets you estimate the likely revenues over the long term and to take a longer term view on the increased value of your property.
There is a big market out there for properties that have good income from tenants and have appreciated in value.
Don’t Pay Too Much And Factor Everything In
Be careful not to pay too much for your property. Know the market prices for the properties that you are interested in and look for motivated buyers who need to sell at any price because they have personal reasons for doing so.
Get the house surveyed as you do not want to be faced with expensive surprises later. Get a trusted builder to give you accurate estimates for conversions or repairs that are required. You will want to budget properly for this and not purchase a “money pit”.
Start Small And Grow
Don’t overstretch yourself with your first investment. You can find small terraced houses that are a bargain rather than going straight for semi detached or detached properties. It is often less riskier to buy several small properties rather than one or two large ones.