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8.It is always better to acknowledge the pitfalls
Property investment is not all good news and great returns. Before you
place your bets, it is important to weigh all the negative aspects in addition
to the positive ones. Will you continue to hold your investment in event of
falling house prices? Alternatively, what will happen if you are unable to
remortgage? These are just some of the questions you need to prepare for,
before investing.
Your popular may sit empty for a month or two in spite of being located in a
popular area, or the house may need unexpected major repairs. Factor in
such events and plan your investment prospects accordingly to avoid
breaking the bank.
9.
Aim for rental yield instead of short-term capital growth
There may be many popular buy-to-let millionaire stories out there with
their extensive portfolios, but as double-digit property price rises vanish
with time, experts suggest the most prudent choice would be to invest with
an aim for rental income instead of short-term capital growth.
As a majority of buy-to-let mortgages run on an interest-only source, the
borrowed amount is not easily paid off over time. Once you are able to
secure a rental return significantly above the mortgage payments, you can
enjoy the prospects of building an emergency fund, or saving and investing
the extra income.
That being said, remember that it is not only the mortgage repayments that
need to be accounted for, but also running costs, agency fees, repairs and
taxation may eat into the return.
After all these costs are factored in, you can allow the cash to accumulate
over time and use as start-up capital for further investments or to make the
final mortgage payment at the end of its term.
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