Why is education important to property investors?
Do I need money to invest in property?
Can I purchase property with no deposit?
What kind of discounts can investors expect to negotiate?
How do I determine my own personal property investment strategy?
Is it easy to get a mortgage?
Can I have more than one buy-to-let mortgage?
Are buy-to-let mortgages capital repayment or interest only?
How many mortgage products are there and how can I access them?
Can I sell my investment property as a way of making money?
How do I find a tenant?
How much rent should I charge?
Should I let my property furnished or unfurnished?
Who pays the council tax for the property?
Who pays the ground rent and service charges on my investment property?
What happens if interest rates go up?
Is now a good time to invest in property?
What if I cannot rent my property?
Are there any guarantees in property investment?

Why is education important to investors?

When it boils down to it, most people do not invest in property for one singular reason – FEAR.  Fear of debt, fear of not getting a tenant, fear that it might be too much like hard work.  Well, we believe that the best way to overcome fear is to educate yourself, as you would for any profession.  Investing in your own knowledge and education will never be wasted and any training you pay for is tax deductable!  If you are going to treat property investment as a serious business, then get yourself properly trained and educated.  Our philosophy is that you can never learn less!  We believe that a savvy investor is constantly adding to their knowledge and raising their game to move their portfolio forwards.  Education is key to making astute financial choices, and understanding your investment from all angles.  Property investment could be viewed as a double-edge sword.  Get it right and you are on your way to financial freedom.  Get it wrong and you could be on your way to financial ruin.  Knowledge and experience are key to understanding and minimizing your risks.   To get started in property investment or increase your knowledge, we recommend a particular property investment training course that we have all personally attended and got great value from.

›› Back to the top...

Do I need money to invest in property?

You will always require some capital when you are investing in property as there are fees to pay such as stamp duty, lettings agent fees, service charges, ground rent, purchasing furniture, blinds etc.. It is recommended that you have approximately £10,000 prior to investment.  Furthermore, you may need some liquid funds to cover mortgage repayments if the property is unoccupied. (In particular with relation to the first payment, which could be higher than the normal payment depending on which date in the month completion takes place).  Property investment is for the medium to long term future and is not a get rich quick scheme. 4wallsandaceiling.com only ever recommends that serious investors contemplate entering the Buy to Let market, as it does need a certain amount of capital investment.

If you have no liquid funds however, you can release equity from your existing property, but we would strongly recommend you consult with All Set To Let or your Financial Advisor before doing so.

›› Back to the top...

Can I purchase property with no deposit?

Yes, this can be done, but only using certain deal structures and mortgage products.  Under normal circumstances the Lender will lend you up to 85% of the property value. This means you would have to find the remaining 15% yourself. As an example, if the property you are purchasing is valued at £100,000 and you have negotiated a 15% discount to bring the price to £85,000, you can structure the deal in such a way that the discount is used as your deposit.  This is termed a “gifted deposit” or “vendor assisted deposit”.  A bridging loan is often used in these situations.  Please refer to our Finance Section for further information.

›› Back to the top...

What kind of discounts can investors expect to negotiate?

Typically, savvy and experienced investors can negotiate discounts of between 10% and 20% below market value.  This is key to successful property investment.  However, this discount does depend on the development, location and other factors. 

Before securing any property deal, you should organize or research independent property valuations and rental appraisals. It is not uncommon for Developers to overprice their properties as “new build” properties are very appealing. It is vital to fully assess the true value of each investment property to avoid investor disappointment and down valuations as the mortgage process proceeds. It is in everyone’s interest that the true property value is established before any deal is completed.  All Lenders will carry out their own valuations regardless of the stated value. If the Lender down values the investment property it could mean you have to invest more of your money for the deal to proceed.  This scenario is avoided by a rigorous vetting and due diligence process.

You can do your own due diligence by visiting such websites as www.ourproperty.co.uk , www.primelocation.com, or www.findaproperty.co.uk  which have comparable sale and rental prices for the area you are interested in. 

›› Back to the top...

How do I determine my own personal property investment strategy?

It is vital to have a goal when investing in property. Otherwise, you have nothing to aim for and no strategy to what you are doing.  Maybe you want to invest in property as a pension hedge, maybe you want to retire early from work, or maybe you want to fund your child’s education?  When you know what your goal is, you can then move towards it.   You may opt for properties to achieve capital appreciation, or you may opt to go for properties with high rental yields, to provide you with an immediate income.  We can discuss and formulate your personal strategy with you.  Please call the office for further details. 

Is it easy to get a mortgage?

A buy to let mortgage is normally secured on the property you are purchasing. The Lender, as part of the mortgage process, will carry out a credit search on you to see if you have any adverse credit problems, such as late or missed payments in the past. In addition, they may check if you have any outstanding loans or credit card payments.

It is therefore important to ensure that you have the cleanest credit record possible. Generally speaking, most people should be able to obtain a buy-to-let mortgage, whatever their circumstances - but if the Lender feels there is a risk in lending you the money this could also affect the interest rate offered to you.

We recommend you contact Experian or Equifax to obtain a copy of your credit report and check whether there are any issues on it that might affect your ability to obtain a mortgage.

›› Back to the top...

Can I have more than one buy-to-let mortgage?

Yes. However, some Lenders will restrict the amount of exposure they have with any one person, sometimes restricting them to a limited number of mortgages.

›› Back to the top...

Are buy-to-let mortgages capital repayment or interest only?

The majority of Buy to Let mortgages are entered into on an interest-only basis because the figures calculated on rental income are more likely to stack up. Repayments on the capital aspect of the loan may not give you the rental return to cover the mortgage. Full guidance and professional advice should always be sought before deciding which mortgage product is right for your purchase.

›› Back to the top...

How many mortgage products are there?

There are over 66,000 mortgage products on the current market and product features and interest rates change on a regular basis.  It is important to develop a strong relationship with your broker to ensure that you are kept informed of the latest products and to work with your broker to best utilize them to move your portfolio forwards.  Please visit our Finance Section for further information.

›› Back to the top...

Can I sell my investment property as a way of making money?

Yes, you are free to sell your property at any time - after all it is your investment!. However, if you are serious about long-term financial freedom, you should really be investing in property for the medium to long-term, as the plan is to accrue equity from capital appreciation of the property.

When you have accrued sufficient equity, and the rental income allows, you can re-mortgage the property and release cash, which is TAX FREE.  You can then use this money to invest in more property.  Therefore, the business model we advocate is to hold all your stock for the long term, release equity when circumstances allow, and purchases more property.  In other words, re-cycle your cash.  After a while, your portfolio will become self-funding.

If you do sell a property, you incur a capital gains tax liability.  Therefore, the true way to wealth creation in property is to hold onto your stock indefinitely, and just keep taking equity releases to fund further investment, finance your children’s education, allow you to retire, or fund your lifetime ambition.  It’s up to you!  View your properties as golden geese who lay a golden egg every few years.  You can use an equity release from your investment property to pay back the original equity release from your own home, which means you only borrowed the money from yourself for a few years to grow additional assets.

›› Back to the top...

How do I find a tenant?

This is the greatest fear of novice investors, but, if you buy the right property at the right price with the optimum mortgage product,  you should have no problem in finding a tenant.  95% of all tenants are rated as A1 which means that they pay their rent on time, and do not damage the property.  You only have to avoid the 5% of bad tenants and that can be done by a vigorous vetting process.  The best way to never experience a bad tenant is not to let them into your property in the first place.  If you do get a delinquent tenant, it is important that you understand the law and use a reputable firm to help you get the tenant out of your property.

It is often easier to get a suitable Letting Agent to rent and manage your investment property for you.  Most investors have busy day jobs and do not want the hassle of collecting rent and finding new tenants etc. It is much easier to pay a fee, normally between 10% and 12% of the monthly rental income for doing so. If you do use a Letting Agent this has to be taken into account when you assess your outgoings.

›› Back to the top...

How much rent should I charge?

Before securing a property, you should have researched a rental assessment to determine realistic rental values.  Developers can sometimes exaggerate what their properties can be let for, which is why due diligence is so important   The lender will also undertake a rental assessment.  This is an important survey as your mortgage can sometimes be offered on the Loan to Value that is calculated on expected rental incomes. If the rental valuation falls short it can affect your mortgage offer and may mean you have to put more money into the deal.

However, even though a sensible monthly rental figure is the best way to get your property let quickly, be aware that some investors do try and let their properties for more than the going rate and this can affect how quickly the property is let.  It is better to have a small shortfall in rental income than an empty property.

›› Back to the top...

Should I let my property furnished or unfurnished?

We advise marketing your property as “flexible” i.e. the tenant can have it furnished or unfurnished.  If you have three prospective tenants who want it furnished and one prospective tenant who wants it unfurnished or part-furnished, then you would obviously choose that tenant.  Somebody who walks in with a sofa on their back is probably planning on renting for a while!

Supplying a furniture package is also an added cost to you, the Landlord, so you need to carefully consider your budget. Remember, before any property is let it must have floor coverings, i.e. carpets or laminated floors etc and window dressings such as blinds or curtains.  We also advise dressing your property with pictures, mirrors, and shelves to make it stand out from the crowd.

We can supply contacts for blinds and furniture packs with competitive rates.

›› Back to the top...

Who pays the council tax for the property?

The tenant is responsible for his or her own Council Tax on each property.
Council Tax information is readily available on the internet and you can often correspond with the Council Tax office via email.  It is good business practice to notify the local Council of the name of your tenant to ensure the bill is in the correct name.(Don’t forget that you may qualify for a council tax exemption notice for the first 6 mths on new build providing the property is unoccupied and unfurnished).

›› Back to the top...

Who pays the ground rent and service charges on my investment property?

The Landlord is responsible for the payment of ground rent and any service related charges. This payment needs to be factored into the monthly rental assessment if possible.  It is important to stay up-to-date with these payments as, if you go into arrears, it can affect your chances of re-mortgaging the property in the future.

›› Back to the top...

What happens if interest rates go up?

The Bank of England determine the base rate and it can change regularly.  The trend of late has been upwards.  Therefore, investors can look to fixed rate mortgages so that they know their exact monthly outgoings and can rest easy that their mortgages are not going to go up during the fixed rate period.  The truth is that the savvy investor is prepared for any eventuality and can cope with challenges that may arise.  This again highlights how important education is to understand and minimize your risk and make astute financial choices.  Your Broker should also be a great support to you and give you sound financial advice.

›› Back to the top...

Is now a good time to invest in property?

From an investment point of view there is never a right or wrong time to invest in property. Your own home has no doubt gone up in value just by you living in it.  All the houses in your street have gone up in value.  Did you all buy them on the same day?  No, you didn’t!.  Historical precedence proves that property in the U.K. doubles in value every 6.8 years.  Therefore, the best and only time to buy is NOW!  Unless of course you have a time machine where you can go back into the past and buy property!   Remember, it is much, much better to buy and wait than to wait to buy.  Property goes up in value 24/7, rain or shine, whether you get out of bed or not, so every day that passes is an opportunity to accrue equity.  To make money in property, you need to own some!.  Therefore “thinking about investing” is actually costing you money.  Take action and invest now, but do it safely and understand your investment.  We will help you every step of the way.

›› Back to the top...

What if I cannot rent my property?

If your property was purchased below market value with a competitive mortgage product, your rent should be competitive, making it attractive in the market place.  However, if you have trouble finding a tenant it may be prudent to reduce the rent a little bit initially to get a tenant in.  You can then look at increasing the rent after 6 months. 

We always recommend having a contingency fund of a few thousand pounds to help you through these periods.

›› Back to the top...

Are there any guarantees in property investment?

No, as with any investment there are no guarantees.  However, the one thing we can absolutely guarantee is that seven years is going to go by!  Therefore, if you purchase a property today, historical precedence shows that in approx. 7 years time, it will have doubled in value.   In seven years time, would you like to have a number of investment properties in your portfolio that have all doubled in value?   If the answer is “yes”, then you need to invest now because the clock is ticking! 

›› Back to the top...

Alternatively, I offer individual support and mentoring to help you build a bespoke portfolio.  Please contact us for further information.

›› Click here for more information on personal tuition.

›› Back to the top...