Nowadays it is very easy to get into number of problems while investing into properties.

Will all regulations around it is pretty much impossible to deal with the property investment yourself without getting into trouble. Although it is wise to have money invested and properties seem to be a secure option for majority of us it is even wiser to invest smartly. Let’s check the few mistakes.

Have a goal.

Without a goal with regards to an investment you may just float around without many purposes and not getting anywhere at the end. Have your financial goal and stick to it.

Invest because the price will go up...

Well, you invest into the property if it is a good deal. It has to be Below Market Value. If you buy a property worth £200000 for the same price it is not an investment but a gamble. Don’t believe people around - don’t worry the prices will go up. We all know they not always go up and you may be disappointed. Do you know anyone with negative equity after 2007:(?

Invest in rent only.

Unless you are in a position to buy property for cash or with the hefty deposit as an inexperienced you should avoid buying properties for pure rental income. It is very easy to calculate. Typical rental yield is in the area of 5-6%. So if currently at the end of 2018 the average buy to let fixed rate deal is close to 4% and it is close to all the time lowest we can expect those rates to increase to about 6-7% in next few years. Bear in mind that extra 2% you can add as the expense for maintenance, void periods, and eviction problems. It will simply kill all profit and especially those clients with repayment mortgages will suffer as it very likely that their mortgage payments will exceed rental income.

Tax avoidance.

No matter how loudly everyone speaks about it and regardless of how hefty fines investors pay it is still often practiced. Let’s face it - cash payment for rental payment is accepted but has to be declared and preferably paid into bank account first. And how about “forgetting” to declare capital gain on property sale? Probably in a few years to come, we will be a society with only electronic payments available and further introducement of Blockchain technology should put that problem once for good. For now, just hefty fines and inability to obtain the mortgage without proof of rental payments prevents some of the investors to continue such a high-risk stupidity.

Not meeting Council and legal regulations.

Regulations are because there is a need for it. You like it or not you need to comply with them as it is a law. So if you want to risk being prosecuted in case of fire in overcrowded or not fire risk complied property there you go. Is a few quid savings or few quid extra in your pocket worth risking your personal life and pretty much ending so-called investor “career” in properties. Not meeting regulations can stop investor owning any more investment property in future from both legal and possibly can force an investor to sell the property by the lender.

Not complying with lenders criteria.

So you bought a residential property and you wish to rent it out you need to get content to let from the lender. If you let property as multi-let your mortgage HAS TO be for a multi-let property. If not you seriously risk having your property being even repossessed for not complying with mortgage deed. And for multi-let - how long does it take for someone call Council after a party in your HMO. And afterward how long will it take for a lender to find it out.

Hands-on approach.

Investments = you invest your money, not your time. With one single let you may not see it as the major obstacle but... it still takes your time and by far usually, you are not the professional to deal with a majority of things. Are you a letting agent, accountant, maintenance man, solicitor and estate agent at the same time? No, so delegate - it is investment then and not wasting your valuable private time.

Sell.

Profit is from a sale. So if you think that you achieved your financial target be brave to sell the property. It is only then when you can sell you are the successful investor.