For the past few years, purchasing one or more properties to rent them out has been a great idea for many investors. People from very varied professional backgrounds have engaged in this sort of estate investment with great success. Property prices and rent fees in the UK allow owners to see interesting returns, and decreasing mortgage rates help the income margins become wider.
However, the situation for landlords hasn't been so bright lately, as some government measures attack landlords, especially when it comes to estate taxes. Many owners, especially those who let only one property, have been negatively affected by these measures.
Holiday lets are a variation from the buy to let scheme, which have some advantages that attract more and more investors. Purchasing a nice property in a touristic area and then letting it to tourists is a great option because you can let them for a high price, and you have the opportunity to live in the property yourself while it isn't rented.
Main disadvantages when you let your holiday home include increased cleaning costs - since the property is rented many times a year - and the need to constantly look for new crofters.
If you want to stay in your home but you dont' want to let it any time of the year, another thing to consider is equity release. This is a financial scheme that in many aspects resembles a mortgage, and there are different sorts, like lifetime mortgages and home reversion. The concept behind equity release is that you can take a fraction of the value of your home and turn it into cash that you get from a lender.
Equity release deals are available for people over 55 years old because they are designed to be long term estate deals which will be paid off when the property is sold, either because the property owner dies or because he or she moves to long term care. The attractive feature of equity release is that there are no monthly payments, as there are with regular mortgages or many other sorts of loans. In some schemes, you actually sell part of your house and become a co-owner, while in others you agree to pay back the debt with the sale of the property.
Perhaps the most obvious way to turn something into a profit is to sell it. However, when it comes to estate, unless you live somewhere else selling the property will mean a huge change in your life; you need somewhere else to move, with all that implies. Selling your house for money is usually a good idea when you plan to relocate somewhere else, and you're no longer interested in keeping your old property. Downsizing, moving with a spouse or to long term care are usual reasons for selling your old home.
Making money this way has become easier nowadays with rising property prices plus dropping mortgage rates, which combined may allow you to cut a nice difference if you relocate. However, you must consider that selling and purchasing properties include many fees, such as conveyancing costs, agent commissions, and paperwork fees; all of these will cut down your profit.
Some investors purchase properties and wait for the market price to rise, so they can sell them again for a profit. This is a valid scheme for making money, but unless you rent the property - with all the loss of value it means, due to wearing - this is frozen capital that can last as such for many years. If you have so much money that you don't mind investing this way, off you go; if not, this might not be a good path for investment.
This is a quite new option for the traditional sale scheme. The main disadvantage of the traditional model is that not all properties sell out in the first weeks. Sometimes, it takes months, or even years, to find a buyer. In some cases, people are willing to wait longer until they come across a good deal; in other cases, homeowners are in a hurry and need to get cash and/or the property sold as soon as possible, even if it means to cut down their profit.
Enter quick sale companies, which are estate investment companies interested in purchasing properties for a fraction of their market value so they can have a profit margin. The main advantage for homeowner is that these companies usually close their deals in a matter of days, and they are far less demanding about the state of the property. Companies such as Harwood quicksell are open to make an offer for any property and close up the deal in a very short time.
Contact our equity release specialists for more information on our equity release products!
Other Equity Agency, 18a North End, Bedale, North Yorkshire, DL8 1AD.
078 1225 0251,