If you're thinking of doing a Sarah Beeny and buying a property to renovate and sell on, planning and budgeting is the key. You'll need to work out what type property will provide you with the best investment. It's vital to consider the needs of your target market from the outset. There is little point refurbishing a one bedroom flat for sale or rent if the local market is flooded with these, but desperate for two bedroom homes. Talk to local agents about what’s most in demand.
To work out your potential profit, if you're buying to sell, you'll need to add together:
the initial cost of buying the property
+
costs of renovation and refurbishment
+
day to day running costs
and subtract the sum from the potential selling price of the property.
If you're buying to let, add together:
the annual cost of the mortgage
+
maintenance fees/insurance
+
agent’s fees
+
lost income when empty
and subtract the sum from the achievable rent to get your potential annual profit. You will also have the start up costs for the property.
For more information, don't miss, How To Buy An Investment Property To Let Arranging Finances Of A First Time Property Development and Which Improvements Will Boost Your Home's Value?
Tip: For further help on all aspects of becoming a landlord, visit the Association of Rental Letting Agents (AORL) website.
Consider renting out a room in your new home to accrue extra income. ‘If you take in a lodger to make ends meet, the first £4,250 of rent received in a tax year is tax free,’ says Chris Jones, LexisNexis director of Tax Training. For more information visit www.direct.gov.uk.
The views represented in this article are those of the author and not of Channel 4. The purpose of the article is to provide general information only and does not constitute financial, investment, legal or other advice.You should not rely on any information provided in this article and you should always seek out independent professional advice relevant to your own particular circumstances.
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