Buying To Let Is A Better Investment Than Buying A Home
There’s a lot to be said for putting down roots and purchasing your first property with the intention of living in it certainly is the norm. However, what if you broke with tradition and actually purchased a house you didn’t intend to live in? Many people are looking at buy to let investment properties as their ideal investment option.
If you find yourself in a position where you have enough money for a deposit for a property, then you might want to consider using that cash to purchase an investment property instead of a home. This investment will make you money and in time, it will generate enough cash for you to purchase your own home, while also improving your investment portfolio.
So, why should you purchase an investment property before you purchase a home for yourself?
The finance process is different
There are not many people who are in a position where they can purchase their property completely, which means that they require a mortgage. However, many lenders are not comfortable with lending the money. In contrast to this, when it comes to investing in property, it is not tied to a standard loan, which means that the financing can be obtained through different options. Investors can get creative with the way in which they finance the property, while the income generated will help to pay off the loan quickly.
If you invest in property, your tenants will cover the cost of the monthly repayments, enabling your property to increase in value without you using your own money.
Generate an income efficiently
The aim of any investor is to purchase a property that has a positive cash flow. Therefore, it is important that you carry out the correct research on the area and the market in general. If you find a property that offers a significant yield then your monthly mortgage payments will be made but you will also make money with it. Once you take out all expenses, any cash left over will go straight to you as a profit. So, all it takes is a property that is in good condition and you will be able to rent it out straight away.
If you purchase your own home then you are not making money. However, if you have to continue renting then the aim is to purchase a property that covers your rent at the same time.
It provides a long-term investment
If you invest in property, you are doing it to make money. If you purchase a buy-to-let property then you can achieve this if the property market has seen an increase in property prices. Therefore, you will be able to sell your property at a higher price than you paid. Investing in property does require the value of the property to increase, so when it does it means that you get to make money without the hard work. The only thing you are required to do is to maintain it. This is a different type of sale when compared to that of your home. You can sell your investment property in order to purchase a large property or several properties while selling your own property carries an emotional attachment and a different thought process.
You are not limited by the property market
When you purchase a property to live in, you have to consider a number of factors such as your job, your families, the area and your earnings. This means that you can only consider a number of properties within a certain geographical area. If you are purchasing a buy-to-let property then you are not restricted by one market. The world is a small place now and because property management companies are located in almost every area, it means that you can consider other markets and areas. This opens many doors, making it possible for you to find properties that have a low purchase price but a high demand when it comes to tenants as this will enable you to achieve a higher yield.
You can choose any property type
Purchasing a property for your own needs is a completely different situation than that of purchasing for investment reasons. You have to consider the size of the property, how you plan to use it and even think about the size of your family and whether it will have enough room and space. This instantly limits you to a certain aspect of the market where you can only choose from a certain number of properties. When it comes to investing in property, you can choose any type of property providing it will generate good returns and that you can cover the repayments. This opens many doors and provides you with more opportunities for making more money.
There are tax benefits
Owning a home in the UK requires you to pay all kinds of taxes which includes council tax as well as many other taxes should you choose to sell and move home. These taxes are lost and irretrievable. However, in contrast to this, if you are purchasing an investment property, the taxes differ and although they cannot be avoided, they can be taken care of in other ways. This will involve tenants covering the costs of council tax while there expenses that can be deducted from any profits such as travel to and from the property, remedial work that has to be carried as well as other costs. Owning an investment property will enable you to maximise your returns while taking advantage of the range of tax exemptions.
So, you might have been saving hard for many years to get onto the property ladder and own your own home but an open mind can really make a difference. If you consider an investment property, then you are owning your own property but one that is generating an income and making you money. Therefore, purchasing an investment property can often make more sense that purchasing a home. Once you find the right investment property and begin to make money, then you can turn your attention to growing your equity before saving up enough money to purchase your own home.