Why Now is The Time to Get into Investing in Rental Property

Investing in rental property is the sure fire money making choice of now and of the future. At the time of writing (April 2008) there is huge unrest in the property market and property repossessions are topping out at all time highs.

Property rentals are still strong and for the astute property investor now is the time to take advantage of all the uncertainty and decide to try and make a financial killing by successfully investing in rental property.

Buying homes that have been repossessed can mean saving big bucks on the price as you maybe able to pick it up at well below market value. The more you save on the purchase price, the less your mortgage should be and potentially the more money you can make from the rental property.

Buying low and renting higher is the best way to turn the repossession business upside down and flip these bad times for a little extra money.

A key to investing in rental property is to choose a property that needs only minimal work. Look at the appliances, the water heater, the roof and the foundation for any damage that many need extra money to fix.

Take these costs off of the offer price, you can even write them down and then approximate the costs of it all and put it into a formal offer letter, so that everything is done professional and the seller is clear on why the price you are offering maybe low.

When choosing rental properties for making money, you must understand why people rent. A £300,000 home can carry a mortgage of £1890 a month. But, in the same area, the home might only be able to achieve £1,350 a month in rental income.

Renters are not necessarily people who cannot afford to buy a home of their own, they may just be people who choose to save that extra money a month. So, if investing in rental property is something that interests you, keep in mind that in some locations the rent you get from tenants might not cover you mortgage.

Going back to the repossessions market, the people who are losing their homes via repossession from the banks are going to need a place to live.

They will be unable to buy another home so quickly after being repossessed, so a rental unit is what they will HAVE to choose. This means money in the pocket of the investor. Looking at a given areas repossession rates can help tell you where potential tenants might come from in that particular area. It might also tell you how quickly repossessions might become available for you to buy.

Making money investing in rental property is a sound choice in today's property market. Repossessions are up, buying is down and ex-property owners are the ones that are looking for a new place to call home.

However, although this can be lucrative two main points of caution need to be adhered to:

1. The most likely reason people are being repossessed is because they are not good at managing their finances. So if you are going to take on these people as tenants you have to try and make sure that they have learnt their lesson to some degree, so that they won’t end up in rent arrears.



Related Articles! How to Become a landlord Buy to Let Facts Investment Property Calculator>

2. Try and buy properties in areas where the rent you will be receiving will actually cover the mortgage costs. These days, this is proving to be more difficult to do than it was in the past, but it is still possible. However, it might take more research to find these locations.

The bottom line is that investing in rental property is as wise a choice today as it was 20 years ago. Even if there wasn’t currently turmoil in the property market and UK property prices started to rise again, it doesn’t make any difference. As long as people need a place to live then the opportunity for landlords to rent out property should exist. We will most likely always be in a situation where not everyone can afford to, is able to, or even wants to buy their own property.

However, you need to still make sure you do the correct due diligence on every property you look at. The worst thing you can do is to be buying properties that you have to be putting money into each month because the rent does not cover the mortgage.

return from this investing in rental property page to the home page of investment property guru

Return to top