Investing in residential property - what to consider?
Mark Solon of Symmetry Financial joined us recently to talk residential property investing.
There's lots of reasons why people invest in this space, ranging from the Irish gra for bricks and mortar, and the fact you can see and feel your investment to the desire to create a second income stream. Some people may be wary of stock market investing, and perceive it as a preferred option. As with all investments it comes with risks. If you do decide to go down the buy to let route, what should you consider though?
What should you look for when searching for residential property?
What's in the area?: Look at properties near schools, universities or public transport hubs.
Research: Do extensive research, speak with agents in the area. Consider using an estate agent to help you find a property.
Patience: Buying a property for investing can take time so bear that in mind. Think long-term, property investment is a long term strategy.
Future Plans: Know your area and look at future plans, there could be a dual carriageway for instance planned in a couple of years down the line at the end of your garden, not ideal for when you are looking for new tenants!
Look at population for the area, e.g future growth or infrastructure investment.
It can be difficult to get loans for low population areas. Banks perceive it as a risk if it is a low population density area, and what might happen if there's an economic shock.
Calculate the gross rental yield - cashflow is king!
What is Gross rental yield?
However gross yield doesn't tell you everything, e.g it doesn't tell you about the area. It doesn't tell you about the condition of the property.
There's also no guarantee of future capital growth or rental growth.
Use your head - not your heart! Is it a good deal? If the economy goes the way of the previous financial crisis will the deal still be a good deal?
Development opportunities - might you be able to convert an attic to another a room or is there room at the end of a garden for a Seomra? Could you generate extra rental income from this development opportunity? The best deals can often be the ones in which you really need to roll up your sleeves and get stuck in to redecorating.
If you'd like to investigate residential property investing opportunities further or see the look at investing in property through your pension, why not book a consultation with Mark Solon and his team at Symmetry Financial here.