Essential planning for property investors

planning for property investors

Essential planning for property investors

Over the lifetime of your investment, a lot of things can change that can affect your returns. Knowing what will impact on your property investment in the future enables you to plan ahead and make sure the property you let is always legal and profitable.

 

 

Five key planning tips to be aware of:

1. Interest rate changes.

If rates go up, it is essential your rental income continues to cover your costs and you are in a position to be able to remortgage and switch to another rate, if necessary. Your current rate might be 3% at the moment, but the average for 2000-2015 was between 5% and 7%, so check your figures and see whether your investment is still profitable at these rates.

2. Property prices.

Although property has always increased in value over time, the market naturally experiences peaks and troughs and there has been the occasional boom and crash.

In the last recession, average prices fell by approximately 18%. If you do not have enough equity in your property, you may not be able to remortgage or sell when you want or need to, so avoid over-gearing.

3. Bad tenants.

No matter how carefully tenants are credit checked and referenced, as a landlord, it is possible a bad one will slip through the net. They may stop paying rent, indulge in anti-social behaviour or damage your property, so be prepared and able to act quickly if this happens. To survive bad tenants, have appropriate property and rent insurance and know when and how to begin eviction proceedings.

4.Emergency solutions.

Plumbing & heating systems can break down and storms or flooding can damage your property, making it uninhabitable. Make sure you have contractors that will respond to emergency callouts and that your insurance covers not only damage to the property but also any costs associated with temporarily re-housing tenants.

5. Changes in the law.

If you use a self-regulated managing agent who is a member of either RICS, ARLA or NALS, they should keep you updated and effect any changes, as necessary. If you manage the property yourself, you must make sure you have a way of being alerted to new legislation. Consider joining either the RLA or NLA and/or a local landlords’ association or accreditation scheme to stay up to date.

Owning an investment property is as much responsibility as running a business and planning ahead can help mitigate the associated risks with property investment.