How to invest in property for the first time

Investment in property remains a fantastic option for increasing residual income and/or pension planning. Over the past few years, there have been headlines about landlords being forced into selling because of increasing mortgage rates, and legal requirements chipping away at profit. The reality is the changes have only resulted in a very small percentage of landlords selling. The flip side is increasing rents and growing demand for rental properties from tenants. 


Whilst it is not quite the market of the 1990s, we still believe it is one of the best financial decisions you can make IF you get the right advice and invest well. 


We would love to have a chat to give you personal, bespoke advice, but to get you started here are six factors to take into account: 


Head not Heart 
Remember, you are buying an investment. The property is not intended to be your dream home, or perfect for you. It is unlikely your own ideal interior design and property features will match the demographic of your perfect tenant! All decisions need to be made with the head, not the heart, when looking for an investment property. 


Expectations – and purpose 
Be clear about what you are looking for with a property investment. 

• If investing in a buy-to-let, consider it as a ten-year-plus investment. This will enable you to ride out any economic changes and experience capital growth. 
• If investing in a “doer-upper”, then you want to refurb and sell as quickly as possible. Unless it is your full-time job, and you are highly skilled or have access to skilled tradespeople, expect this to take 12 months, depending on the level of work needed. Six months would be outstanding but challenging to achieve. 
• Do you need residual income each month or are you looking for longer-term capital growth?

Affordability 
Invest what you can afford, and do your sums. Whether you are looking to “flip” a property (refurb and sell quickly) or have a long-term rented property, there are unavoidable costs. Legal fees, mortgage costs, housing standards (often a legal requirement), maintenance, downtime (known as voids) between tenants, and so on. 


The landlords that have been selling recently are those who have either neglected to do their sums with variables such as allowing for mortgage rates to go up, or those who didn’t have a clear financial plan in place so have over-stretched themselves. Property is not a get-rich-quick scheme in 2024 - it is a sensible strategic investment. 


If you need finance, your mortgage adviser will give you different scenarios so you can understand the impact of changes in the interest rate. 


The right property in the right location 
When we are asked what is the ideal property to invest in for a buy-to-let, we can’t answer! It will depend on the area and your expectations. For example, it could be a one-bed flat, a three-bed family home, an HMO for professionals or even student accommodation. It could even be a holiday home or serviced accommodation rather than simply rented. 


Do your research to find out what is in demand and check the sums work out for you. Remember, if you’re building a portfolio, it’s worth getting advice on whether to purchase in your own name or as a limited company. An accountant can help with these decisions. 


Tax 
Tax is just one of the legal obligations to meet as a landlord, or property investor. Capital Gains Tax is payable when you sell an investment property, and income tax is due on rental income. There are ways to minimise the tax by taking account of genuine and allowed expenses, but if you are a higher-rate taxpayer, you will be paying 40% on rental income too. You will need to do an annual tax return, and from 2026, landlords will be included in Making Tax Digital. That means you will need to use certain software and submit returns quarterly. 
It doesn’t need to be complicated, and we can certainly sign-post you to where to get the right help.  


Day-to-day Management 
You can manage your tenanted property directly, or pay for a management service. Your decision may be influenced by how much time you have, how quickly you can respond to calls from your tenant, and whether you have a local network of trades who you can trust to deal with emergency and routine management for you. If managing directly, you need to stay aware of changes in law and statutory requirements to make sure you remain compliant. 


Unless you want your weekends to be disturbed by your tenant calling about a broken boiler or dealing with a blown-down fence after a storm, you need to consider whether you use a management service. We offer a top-class management service for landlords – from finding excellent tenants to dealing with tenancy agreements, legal checks and requirements for the property, and inspecting regularly to help protect your investment. That means we can also deal with broken boilers and blown-down fences too. 


How we can help 
We are happy to have a chat and coffee about your plans to invest in property – we also invest in property and it’s our favourite subject! Whether you need help finding a property, managing a property, or taking the first step into investing, we would love to help. 


The Joe Wood Property Team provides first-class service to landlords. Whether a portfolio landlord, accidental landlord or single property investor, we can help support you and make sure you receive the best return from your investment. 


The services we offer include: 

• Keeping up to date with market rent levels 
• Checking legal compliance 
• Ensuring your investment is protected and being looked after 
• Finding the ideal investment to purchase 

Whatever help you need 
Whatever help and support you need as a landlord, we would love to help you. With our local network and extensive experience, whether needing a fully managed service, or support on one element, we are happy to help. 


We would love to hear from you if: 

• You are looking for a property to invest in for the first time 
• You have inherited a property and need help to decide the best next step 
• You have a portfolio of rental properties you need help managing 
• You are looking to grow your portfolio of rental properties 

You can call or email Joe on 07896 486927 or joe.wood@kwuk.com. Look forward to hearing from you.