One of the best ways that you can make money is through property. People will always need a roof over their heads. And, while house prices do rise, and fall, it is usually a pretty solid area of investment as the market tends to fluctuate quite slowly.
Buy from Auction
One of the best ways to get started in the property market is by buying the cheapest property that you can find. This will usually be found at a property auction.
Often, older properties that require a considerable amount of maintenance will struggle to sell through standard agents. They don’t have the curb appeal that helps move them quickly enough, and it can be to sell a property that you struggle to imagine not being a mess.
There may be structural issues in the property too. These types of problems can affect the ability to take out a mortgage against the house. That will mean that most conventional homebuyers will be out of the question. Not many people have that much readily available cash to throw at buying their home, especially when they will need to pay out a considerable amount to fix it up.
If you have a reasonable amount of savings, or startup capital, investing in an auction property that requires renovation can be the easiest way for you to get into the housing market. It can also be an opportunity for you to generate the most significant mark-up and get the highest return on your investment.
Renovate the Home Yourself
If you are handy, you may want to consider renovating the property yourself. This could save you a lot of money as it will reduce the labor costs involved in renovating. You will need to make sure you are confident in everything that you do.
If a job is too complicated for you, hire a contractor. If you are not confident in the task, you shouldn’t undertake it yourself. You may cause more damage than you can fix. For that reason, hiring a contractor may be a more cost-effective solution.
When it comes to hiring a contractor, be sure, and get full quotes from several trusted companies. Get recommendations and read reviews. Make sure you get a full agreement about how long a job will take to complete.
You’ll need to be a good project manager. Working out the order that everything needs completing is essential, as is being able to solve problems as they arise.
One of the major things that you need to think about doing when your renovate is adding as much value as possible. Think about ways you can maximize floor space. You may be able to convert an attic into a bedroom, or a basement into a dining room. If there is scope to extend the property, look at doing so. You will need to get planning permission, so make sure and submit your application as early as possible as approval can take a long time.
Buy-To-Let, or Sell?
Once you have completed your renovation and the house is ready to be lived in, you will have two choices. You can either sell or rent out your property. You should weigh up the pros and cons of each option. You may wish to consult with a property management service who will be able to advise you on the estimated earnings from rental versus the potential sales value.
Selling the property may give you an immediate bulk of profit, whereas a passive rental income will provide you with regular installments. Of course, if you were to rent, you could still sell the property later on down the line.
The route you choose to take may depend on how house prices were acting at the time. If the sales market is slow, then renting for a time may be a good idea. If house prices are particularly high, then you may want to cash in straight away.
The Next Steps
If you can turn around the process of regenerating the property quickly, then you should look to continue this by investing in further properties. Assuming you sold your first property, you could use the profits from the sale to buy another home to refurbish and each time creating a more significant profit margin.
The two plus one strategies is a good way of building up your portfolio. With this, you should aim always to have three properties. One that you’d keep, and two ready to sell. Or two to keep, and one that you’d sell. That way, you will always have money in your pot for reinvestment.