When investing in real estate, your primary focus should be on finding a property that will offer you generous income. A common misconception regarding property investment is that the only returns you will receive are in the form of rental income, however, there are also much more capital-focused opportunities. Take a look at the following guide which will help you understand the financial benefits of property investment and how to achieve them.
One of the main returns you can expect from investing in property is, of course, rental gains. The rental rate you will receive from tenants will depend on several factors including location, the type of property, tenant demand, amenities and more, which you must take into account before making a final investment decision.
You should try to avoid investing in the first property you see, as this may offer you the generous returns you’re looking for. Instead, you should look in prime locations with high rental yields. If you’re a first-time investor, you may want to consider working with professionals who can help you seek out the best investment opportunities. Property investment experts RW Invest are a great example, as they have a number of opportunities available in the north-west where you can find assured rental yields of up to 8%, which will offer you maximum financial benefits.
Another great way to enhance your income is through property appreciation, which is when the value of a property increases dependent on the state of the market and the economy. To ensure that your property has the potential for capital appreciation, you should conduct some research into the real estate market in order to find a location under regeneration or a neighbourhood that is set to be updated in the future, which will enable you to maximise your returns.
Many investors have achieved success by leveraging an investment property for a small sum of their own money while lending the rest, and after numerous years of capital growth, the property will be worth a lot more than its original price. This is a great way to enhance your profits, as you can sell the property for a generous amount and use the money to invest in other types of real estate to expand your portfolio.
Another financial benefit that many people forget about is tax-write offs, as landlords can actually claim back numerous expenses associated with their rental property. This includes utility bills, council tax and landlord insurance as well as landlord services such as maintenance or gardening. You can also claim back accountants expenses and legal fees, although the latter is only applicable if you have a lease of less than one year or are renewing a lease of under 50 years.
If at any point you have to repair or replace any items which are damaged, under the new law you can now claim tax relief on anything that is classed as a domestic item. This includes beds, sofas, white goods, curtains, carpets, dishes and even cutlery. The cost of these items should be considered when calculating your net profit as you can deduct them from your rental income tax which will allow you to avoid losses and maintain a positive income stream.