The ML Property Venture team, are here to find investment opportunities for our investors. We are strong advocates of building multiple streams of income and our job means that we can watch people start and grow their own portfolios. We feel proud of those who come to us for their first property and then a couple months later are ready for the 2nd…and then 3rd and so on.
We want to assist buyer and seller in making the best real estate decisions possible, by providing relevant knowledge, collaboration and advice.
We’ve summarised our top 5 tips & tricks for getting you started on finding your first investment property:
1. Buy the property BMV
BMV stands for Below Market Value. This is a term that is applied to any investment property. We as investors then look at each property, assuring that we do a thorough analysis of price growth, sales levels and any statistics on the property interest. If you were to buy an investment property which is below the average market for the area, you then have instant equity in the property.
For example: If a property is worth £250,000 and is in reasonable condition, you buy it for £220,000 then you already have £30,000 worth of equity in the property.
2. Add value to the property
If you buy a property and then refurbish it (i.e., give it a paint, put in a new kitchen or bathroom or if you extend the property); you increase the value of the property. The value-add doesn’t always need to be a big project, like adding a conservatory for example; but it does increase the value further by adding more rooms or converting a part of the property. 22 per cent of homes and properties sold in 2019 had an extension added, which then increased the property’s value and makes the property more appealing to potential buyers.
For example: you buy a property for £100,000, your costs could be £30,000 (refurb, stamp duty, etc.) and now it will be worth £150,000 – so now you have gained £50,000 worth of equity.
3. Rental income
Rent is the money that you receive from your tenant on a monthly basis; and you want to always be looking at ways of improving the property to allow you the ability to increase the rent as you bear in mind fluctuations in the market.
For example: When you rent out your property for £600 per month and then you have costs such as; mortgage £120, insurance £20 and you then pay a letting agent £60 per month. That means you net £400 per calendar month.
£4,800 per year and £24,000 in 5 years (if you don’t increase the rent that is)!
4. Rental increase
If you buy in a good area, in time the market rent may increase in the amount of rent to be paid. In other terms, rental increase is an increase in the amount you must pay under a lease as rent which is agreed with the buyer.
For example: If you rented out a property for £900 per month, but the rent in that area increases by 3% per year. That means in a year’s time, your rent will then be £1,043.
5. Capital Appreciation
Capital appreciation is when the value of the property goes up over a period of time. The value of the property can also depreciate. Your property may increase in value overtime but this is not guaranteed. In the long term, property prices do tend to go up, but in the short to mid-term, they also go down, so then to predict what the property’s price would be in the future to calculate the capital appreciation is speculation.
For example: You buy a property worth £100,000 and the value in the market for your type of property increases by 3% per year, in 5 years-time your property will then be worth £116,000!
If you would like to speak with one of the team about wanting to start or grow your property portfolio, please contact us through the Contact Us link.