Aug 19, 2016
Investments can be changeable and unpredictable, which is why it’s crucial to do your research thoroughly before taking the plunge. Traders wouldn’t part with their money without knowing the latest figures or discussing market analysis with like-minded people such as the IG Community, so why would you invest in a property effectively blind, and without such information? Buying a new home is one of the biggest decisions anyone can make, so here are five things you should know in advance.
1. Don’t let your emotions take over
When it comes to choosing a suitable property, think with your head and not your heart as emotions can cloud your judgement. All too often, people walk into a building and fall in love with it from the way it looks, failing to take into account all the significant details that could decide if the property is a good investment or not – such as if it’s on the market at a fair value or whether you could negotiate the buyer down to a more realistic price.
2. Think about the future
Investing in property can be a cumbersome, long-winded process, but as you float from home-to-home looking for somewhere to set up base, always do so with your future in mind. If you want kids, for instance, choosing a two-bedded flat might not be worth your time. Instead, you should, perhaps, be looking for a spacious house with a garden and room for an extension, just in case you want to expand the property. Gaining planning permission and carrying out work can add value to the property you buy, but you must work out your costs cautiously.
3. Know your limits
While on the subject of working out costs, always know your limits. In other words, don’t convince yourself that you can do all the handy work needed round the house to save money if you haven't done a day’s DIY in your life. This could put you out of pocket in the long run, so be realistic and only take on an investment that you can truly afford to perfect. If you’re not very experienced with renovations and yet look to be taking on a lot of work, it might be better to walk away and find a new build with few problems.
4. Budget for unexpected costs
Let’s face it; whether you’re a savvy home-hunter or not, you’re probably going to face unexpected costs down the like, be it estate agent fees or repair work that you never saw coming. You may even find yourself renting storing space if your moving date is delayed for any reason, so always put some money aside, just in case. What’s more, if you’re buying-to-let you also need to budget for potential losses. If your home depreciates in value a financial cushion is a must. Say, for instance, your mortgage is £2,000 a month but you can only let your home out for £1,800, you are essentially losing £200 a month and should have this covered.
5. Invest in the area as much as the property
As an investor, it’s a good idea to invest in an area as much as a property. There are many sought after places in the UK where house prices are likely to increase in value over the years, so it’s well worth working out a budget and seeing what you can afford. Of course, there’s no guarantee. A house in a popular area might still depreciate but if you invest in the right neighbourhood you should at least be able to get a quick sell if you want to move on.
Investing in a property is one of the biggest stepping stones in life, so make sure you clue up on all the details before taking the plunge.