When it comes to making investments, there are a lot of people who advocate investing in property. As a long-term investment, it can be a profitable way to grow your assets and provide a future for yourself and your family.
But as you’ll know from buying your existing home, the house buying process isn’t easy. It’s not any easier when it comes to a second property! And once you’ve got the keys to your second property, there will be a lot to consider to help make sure your investment is a success.
If you’re thinking of investing in a second property, you need to know what you’re up against. Take a look at the following to help you decide if it’s the right move for you.
How are your finances?
To invest in a second property, you’ll need to be in a strong and stable financial position. Many people decide to buy a second property after paying off the mortgage on their first, or when their mortgage payments become low enough to afford a second property. It’s not a decision to be entered into lightly. One property is a big financial responsibility, but a second could be much bigger.
If you’re confident in your financial situation and want to do more with your money than just save it, then investing in a second property could be a wise decision, helping you prepare for your future.
Research what buying a second home entails to help you make the right decision for your circumstances. You could speak to friends and family who’ve made similar investments to get further insight into the process.
Would you consider other types of investments?
Property isn’t the only thing worth investing in. While property is a common investment route for many people, there are other types of investments worth considering, including short-term investments that can prove profitable. From stocks and shares to bonds, it’s worth exploring the different options you have for your investment.
With investments besides property, you don’t have to worry about ongoing work and maintenance, with your costs remaining fairly clear. If you have a significant amount of money to invest, you might want to consider speaking to a financial advisor to help you work out the best methods of investing your money.
What would your second property be used for?
People invest in second properties for different reasons. Maybe you want to invest in a holiday home, or maybe you want to own a buy-to-let property to make some money? Deciding what your second property will be used for will help you when it comes to finding the right property, but will also be vital information for your mortgage application.
Investing in a second property as a holiday home can be an excellent way to get away with your family, creating memories in a home from home that you can share with others too.
Have you thought about the additional costs?
A second property comes with a lot of additional costs. If you choose a second property as a holiday home, for example, you’ll be liable for additional council tax and insurance can be higher for a property that’s vacant for long periods of time.
For a buy-to-let property, your additional costs will come in the form of renovating, furnishing and maintaining a property. There are also risks to consider around rent and payments, and new laws favouring tenants can make being a landlord more difficult.
Do your research on second property costs to make sure you understand what the total cost of your second property could be. While you might be able to afford the property itself, the extra costs could mean that you have to reduce your budget or even consider different options for your investment.
Are you prepared for renovations and maintenance?
Working on your own home can be difficult, time-consuming and expensive – will you manage when you have two properties to take care of? When it comes to a second property, you might be looking at affordable properties in need of renovation – but are you prepared for the cost? While you could take a lot of the work on yourself, it’s likely you’ll need to factor in the cost of contractors at some point. That being said, many people carry out impressive renovations with little funds, and there are simple ways to upgrade kitchens on a budget or revamp a bathroom without having to break the bank.
If you’re going to rent out a property, there are other costs you’ll need to factor in. From having an emergency buffer to cover your mortgage to being ready to cover the cost of maintenance and repairs, renting out a property has a lot of costs attached to it that mean it’s not worth your while.
Do you have what it takes to be a landlord?
Another thing to consider about the buy-to-let route is the work that comes with being a landlord. Managing tenants can be a difficult job, especially if you have no prior experience. One option you could consider is a property management company to take care of this on your behalf. Paying for Block Management can be a weight off your mind, making sure repairs and maintenance are carried out without you having to do the chasing. While the service costs money, it can be a price worth paying to save you the work – especially when you have a job of your own and a family to take care of.
Investing in a second property could be a fantastic way of providing for your future. If you have the money and you’re prepared for some work, it could even give you the opportunity to pull off a grand renovation and turn an incredible profit. All investments carry a degree of risk, which is why it’s important you research your options carefully. A lot of people find success in investing in a second property, could you soon be joining them?
