Real estate is always a solid investment when you have the money for it. Even if you don’t actively use the space, you can profit by renting it out. That’ll afford you a steady treacle of income and a good ROI in the long-term. Here’s how to get started. Decide
The latest research from Warwick Estates, has created a guide to buying a leasehold home in 2022, explaining exactly what a leasehold is while analysing the pros and cons of leasehold ownership. What is a leasehold? A leasehold contract means the purchaser owns everything that sits within the four walls
BDC 319 : Aug 2024
Real estate is always a solid investment when you have the money for it. Even if you don’t actively use the space, you can profit by renting it out. That’ll afford you a steady treacle of income and a good ROI in the long-term. Here’s how to get started. Decide on your target audience As a new landlord, resist the temptation of advertising your property everywhere and anywhere. It might seem a little counterintuitive, but you’re more likely to succeed if you filter a little. First, consider who you want to live in your house or apartment. Put together a prototype tenant profile, as it were. Are you okay with smokers? Singles, couples, or groups? Children or no children? How about pets? Figure out the yes’s and no’s. Once you have an idea of what kind of people you’re looking for, figure out how to reach them. See who is moving out of the neighborhood soon and who will come in to replace them. Ask around to learn what makes that particular area attractive to tenants. When you understand the flow of tenants, you’ll have a pretty good idea of where to focus your advertising efforts and find the best people for your property. Establish an appropriate price This is always a little tricky, but there are a few key factors to consider. First, get some insight into the neighborhood real estate market. Learn the height of rent of the other properties in the area and calculate the average range. You might also discreetly inquire with the tenants if they think the prices are fair. Next, determine the baseline value of your property (by square foot). Then add the value of all the time, money, and effort you put into design, renovations, repairs, security, and miscellaneous amenities. Keep in mind that you have to adjust to the market. If your real estate’s total value ends up significantly higher, you’ll need to compromise. Try to find a middle ground between your investment costs and the overall prices in the area. Set up in the right state If you have any flexibility with where to locate the property you want to rent out, you should take time to make a careful selection. Take a page from the book of professional real estate investors. They aim for property in particular states to maximize their ROI and bring in profit on a regular basis. Beginner investors and “regular” homeowners looking to lease out should do the same. For example, Texas consistently rates highly on lists of states for property rent and purchase. Some of its most attractive locales include Brownsville apartments for rent as well as homes in Midland. Texas is legally friendly to investors as well as offering good advantages to landlords in general. In fact, 2020 data cites it as the second best state to rent in, after California. Take quality pictures People like to judge the book by the cover no matter what anybody says. That’s why you should take high-quality photos for your ads. Take them yourself if you’re confident in your skill and equipment. Otherwise, hire a professional photographer. Stage the photos strategically to show off the best aspects of the property. Make them look bright and natural. Avoid taking pictures in artificial lighting if you can; daylight will almost always produce more attractive results. Remember that these photos will be the first impression anyone gets of your property. Advertise on the right platforms Once you’ve decided on your location, price range, and ideal type of tenant, you’ll need to put together a rental listing and post it online. You can put it onto dedicated real estate rental sites or your own social media. It would probably be best if you did both. First, find out which websites are the most popular for finding houses or apartments in the area in which you want to rent out. Start by searching for something along the lines of “[property type] for rent in [location]”. Take a detailed look at the few top results. Aim to advertise on the most popular sites to expose your ad to the most home-hunters. However, if you notice a website doesn’t feature many ads for your type of property, forgo it even if it’s popular. For example, if you’re renting out a summer house but the site is mostly about apartments, you can expect people who are looking for summer houses to overlook that particular platform. Renting out a piece of property is a potentially great long-term financial project. Just avoid the common pitfalls, like getting bad tenants or misgauging your rates. Advertise in the right places with quality photos and sensible numbers, and you can enjoy the fruits of being a landlord for many profitable years.
The latest research from Warwick Estates, has created a guide to buying a leasehold home in 2022, explaining exactly what a leasehold is while analysing the pros and cons of leasehold ownership. What is a leasehold? A leasehold contract means the purchaser owns everything that sits within the four walls of the home, but does not own the land surrounding the home, the ground below it nor the sky above it. When buying a flat, for example, it’s almost guaranteed that the purchase will be a leasehold agreement because a building owner or landlord continues to own the other flats in the block. Furthermore, a leasehold, unlike a freehold, is not permanent, there is a limited timeline of ownership, otherwise known as the term of the lease. This lease is often hundreds of years long, but once it expires, ownership of the lease transfers back to the freeholder. For context, in 2021, leasehold purchases accounted for just 18.9% of all property transactions in England & Wales, with freeholds making up the remaining 81.1%. What are the advantages of a leasehold? With absolute ownership out of the question, why would anyone want a buy leasehold instead of a freehold? First, a leasehold property is often cheaper than a freehold because of the lack of outright ownership it provides. and the leaseholder is often not responsible for paying for the general upkeep of communal areas in the buildings such as corridors and stairways. But leaseholds are rarely purchased for their advantages over freehold, more because leaseholds are essential when buying a flat in a tall building of flats and have, as such, become increasingly popular as we see urban areas developing vertically rather than horizontally. What are the disadvantages of buying a leasehold property? The truth is that leaseholds are often a necessity rather than a choice and there are significant downsides of leasehold ownership. First, a lease is only held for a limited amount of time – ownership will, one day, expire. Second, a leaseholder is often expected to pay significant fees to the freeholder/landlord in order to contribute to the upkeep of communal space, for example, and for essential repairs to the building. A leasehold also tends to limit the amount of changes the owner can make to their home and permission is often required from the freeholder. If not, a leasehold can be stripped. This lack of freedom can also extend to things like pet ownership, or running a business from home, or sub-letting to third-party. Finally, when a leasehold starts running out, it can be very difficult to find a buyer for the property so the opportunity to benefit from capital gain is small. And, since the Grenfell Tower tragedy in 2007, the external cladding scandal has added a further level of complexity for flat owners to break free of their leasehold contracts. What happens at the end of a leasehold property? It is often the case that the end of a leasehold is not something any owner needs to worry about. Often, a leasehold will be for 999 years in order to make it a more attractive agreement for buyers. Many vendors will suggest that a 999-year leasehold is ‘as good as a freehold’, but such sentiment tends to ignore all of the potential downsides listed above. If, however, the lease does expire, the ownership of the property reverts back to the freeholder and it is theirs to do what they want with. But, one can ask for an extension to the leasehold. In fact, once a person has owned a leasehold home for two years, they will often have the right to extend the lease by 90 years.
