Property Budget And Goal Start-Up
This article will guide you through the process of setting up your budget and setting goals for your initial or additional property investments. While we are sharing insights based on our experiences working with property investors, it is essential that you seek professional advice from financial consultants and mortgage providers.
Budget
Establishing your budget is a critical component when it comes to purchasing a buy-to-let property. It is important to view this as a business venture and not your own home. Most mortgage lenders require a 25% down payment, while 80% loan-to-value is occasionally attainable. However, sticking with the standard 25% is advised as it is the typical market requirement when seeking out mortgages.
When looking at properties, the cost is a huge factor. The more expensive it is, the more taxes and expenses will come with it. Through my many investments, I've noticed that properties priced at around £90,000 or lower can often be in run-down locations with low demand. However, it's important to consider maintenance costs and the type of tenant you're aiming to attract when deciding how much to spend. In an ideal situation, I'd suggest having around £25,000 to £40,000 saved in the bank when looking to secure your first property investment.
If you have saved up a £25,000 deposit, then you could look at properties around the £100,000 mark. then we must consider stamp duty, this does change so I would advise you to check but for now, it’s 3% of the property price on additional properties in the UK. Based on the property price above this would be £3,000. purchasing legal costs will vary between £1,000 -£1,500, majority of mortgage providers will come with a free survey however if you are also planning to carry out an independent survey this can vary from £400-£1000 depending on what scale you want the survey.
Once you have your budget in mind and feel comfortable with the figures we have described.
We now move on to setting your Goals.
Three Most Common Goals Set By Property Investors
This goal tends to be set for first-time investors where the main goal is capitalizing on rental profits, the main drive for this goal is to recycle the rental profits quickly as possible onto further property investments.
— First Time Investor
Experienced investors who tend to already own a few properties, will set the goal to diversify their property portfolio, this means properties with high rental income and properties targeting capital growth, and diversifying risks.
— Seasoned Investor
These investors simply set goals in three areas, rental profits, capital gains, and finally property options they do not have the time to manage, whether that is due to a busy life or don’t want the hassle of tenant management.
— Hands-Free Investors
We do have clients who have all of the goals listed above and they do seem to have all one thing in common, they want secondary incomes to oppose the alone work salaries, and also to build a property portfolio to retire with or become financially free.
So What Are Your Budget And Goal?
We can help with the next steps in regards to a free consultation and help with property sourcing, we will take your requirements and find options that fit in with your budget and goals, so why not get in touch?