Lettings Direct - Letting Agents, Property Management Specialists and Buy to Let Experts.
Before an investment property is bought is essential to consider how you plan to make money from the property investment and how you plan you exit or sell your property. There are various different reasons why people invest in property; some people want to use the property as a type of pension, others will want to let the property grow in value in time or even to put their money in an off shore investment.
We have listed below are the tested and tried strategies most Property Investors have used so far:
The favoured option for most Portfolio Landlords, as overtime property prices do always raise and it’s worth keeping investments to Re-Mortgage at a later date to help expand the portfolio.
This is more of a longer term prospect whereby you would need to ensure you have a capital & repayment type of mortgage.
You refurbish the property making cosmetic, mechanical and/or structural changes and sell for cash. Sometimes it’s called ‘Buy-To-Sell’, or a ‘flip,’ if you hold it for a short length of time while making changes and then resell.
This is not a common option and certainly not a secure one, but it's where you would sell the property to your tenant/buyer using a lease option; they choose to exercise their option to purchase sometime in the future.
Once your exit strategy has become clear it is important to look at other considerations, such as Capital Gains Tax (CGT) which is the tax payable on the profit or gain you make when you sell your investment property.
It's always worthwhile to have a good Accountant who knows about property as you start to build a portfolio as they will be able to advise what is the most tax efficient way to structure your investments and also what costs and charges can be off-set against your income to mitigate income tax on the rental income.