Crucial Considerations When Investing in Property

The property market has been becoming increasingly lucrative over the years, largely due to rocketing demand and prices/price growth rising consistently. In fact, house prices have risen by about 400% since 1993, showing just how much of a behemoth the market has become.

Those looking to invest in property could well be in to make a tidy profit, but there are also many considerations to make before taking the plunge. As such, here are some of the mainfactors you should think about.

Tax

You will likely have to pay tax at some point during your real estate investment journey. If you buy a property outright, then you may have to pay Stamp Duty (although first time buyers are exempt for properties worth under £300k).

When you want to sell the house price on, you will also have to pay capital gains tax if your house has risen in value. Currently, the capital gains tax applied on property stands at18% on residential property. It may well be worth getting some legal advice from a professional company like DWF to help you understand the ins and outs of tax and how you can be tax efficient with real estate investment.

Fees/Costs

The main fees associated with buying a property are estate agent fees (if you use an estate agent, although there are many other potential costs to think about). Some properties, for instance, may need some work doing to make them shipshape and primed for selling on.

Thinking about how to keep fees down is also important, and to this end it is worth noting that there are other options to the traditional high street estate agent too. Online estate agents are emerging which provide a similar service to a regular estate agent but for a fixed price, which often works out much cheaper.

Passive Income

Buying a property and selling it on when it has increased in value not the only way a property can generate a profit. You may also want to think about how your property or properties can generate a passive income. One of the most popular options would be renting it out to tenants, which can certainly generate a decent monthly income without you having to lift a finger.

You could also consider shorter term renting on sites like Airbnb, which may well generate a higher profit, but also take slightly more management (and do not guarantee a certain income every month). If you factor in the rising value of your property on top of this passive income, you could well stand to make a decent amount of money in the long run.

Investing in property would certainly be considered one of the safer options when it comes to investment, but it is important to be cautious and bear in mind that profit is never guaranteed. Keep an eye on the market, and research your investment thoroughly before you put your money into it. This will maximise your chances of turning a profit and help you navigate any market risks.

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