Singing Pig

Investing In Rental Markets

Rental property investment has become increasingly popular over the last few years, with some areas showing 1 in 10 property sales are for buy-to-let purposes. Rental property investment has become an alternative form of investment for many people, because it offers a double return, in that you get both rental income and possible capital growth. If done correctly it can also be safer than many investments, with the rental payments covering your mortgage, so even if the property price does not increase you are still covering your immediate payments. There are problems that can occur though, and good property management is needed. This article aims to show you the advantages of rental property investment, as well as how to use rental property management software to help with maintenance of your property.

The Popularity of rental property investment

Whether rental property investment is a supplemental income or a full time job for you, there are a number of reasons why it has become so popular:

• Renting property is now more socially acceptable than it once was, so there are more potential customers. 
• There is greater legal protection for landlords nowadays, meaning that you can get your property back more easily and also charge competitive rent prices.
• Buy-to-Let mortgages have meant that property investment has become a real alternative to other forms of investment such as stocks and shares.
• It offers more excitement and control than stock investment, which makes it attractive to a lot of people, as they feel their investment success is in their hands.
• Low interest rates offered by banks & building societies encourage people with capital to look for increases in returns, with property being a safer bet than stocks as you very rarely lose all your money.
• With pension scheme problems increasing, there is less security for retirement, and so people have to look at other ways to make money. 

In the beginning

Rental property investment can range from having a small side project to owning a large portfolio of properties. Many people start out small and end up with a few properties. Rental property investment has made more millionaires out of people than virtually any other sector in recent years, although of course this does not guarantee success. There are a number of different types of rental property investment, with the most common type being residential property. Most people think of rental property investment as being associated with houses or flats or lodgers. However, there is also the possibility of commercial property investment, which includes offices and shops. There are large numbers of both small and large commercial properties, which can often provide the same level of income as residential properties.

Residential vs. commercial property

In general the risk involved in residential property is low. Of course there are ups and downs, but if you have bought the right property you will be able to easily rent it out and sell quickly if needed.  Commercial property is different and is perhaps a riskier form of rental property investment perhaps riskier. However, it can offer higher returns than residential property. 

Things to consider

Whatever area of rental property investment you enter into, there are things that you must consider before buying a property:

• Buying in a good location - ideally an improving area with good amenities, plenty of activity and perhaps even good local landmarks or tourist attractions.
• Buy at the right price, and do not go over your budget, as there are always extra costs to think about.
• Do market research - what tenant demand is there likely to be?
• If possible buy a large property and split it into smaller spaces for letting.

The risks

As with all investment, rental property investment does carry some risks, although it compares well with other types of investment. Rental property investment often gives higher returns than building societies and savings, and is not as risky as playing the stock market. 

Property management

When you eventually enter into the rental property investment market, one of the most important things to remember is to maintain good property management. One effective method is the use of rental property management software. This software can help you to order and maintain both the condition and financial affairs of your properties, as well as locate and keep track of tenants. The features of such software often include:

·         Property and applicant databases

·         Window card printing features

·         Viewings management facilities

·         Floor plan viewers

·         Accountancy and rental transaction software

·         Property summary listings