Thinking of buying a property investment in Edinburgh? Here are some tips on getting yourself ready to make your first property investment.
- Register with a solicitor – You’ll need a solicitor in order to make offers for suitable properties and, with properties selling in super-quick times you don’t want a delay in making offers. You should choose a solicitor nice and early so that they are ready to make offers on your behalf when the right property comes along. A solicitor will have to carry out Anti-money laundering checks, including checking your ID in order to register with them. This is a straightforward process but worth making sure you’re organised so you can jump on making an offer for the right property when it comes on the market.
- Speak to an accountant – there has been a raft of tax changes imposed on landlords over the past 2 years with more coming. It’s worth speaking to an accountant to understand the best route forward for you; ie whether to buy property personally, within a company, in your spouse’s name, in your children’s name. Your accountant will be able to look at your full financial picture to advise on the most sensible way forward.
- Get your funding ready – Unless you are a cash buyer you should speak to your bank or to a mortgage advisor to establish how much money you can borrow and how far your budget can stretch. Generally speaking you’ll want to put down at least 25% of the value of the property as a deposit to make sure you get the best deal. If you have a good chunk of cash it might be worth leveraging this money and potentially buying 2+ properties to maximise your exposure to capital growth and rental income. Your mortgage advisor will be able give you information on the right deal for you, including information on your future monthly mortgage payments and information required by lenders in order to approve your loan. You’ll want to know all of this before making offers to avoid any delays to purchasing properties once offers have been accepted.
- Understand all your costs – make sure you understand ALL your costs and don’t be too overoptimistic; it’s better to be conservative and to be pleasantly surprised with the future performance of your property investment in Edinburgh. Make sure you understand LBTT (Land and Buildings Transaction Tax) and the 3% ADS (Additional Dwelling Supplement), legal and registration fees related to the purchase, the cost of furnishings (1-2 bedroom packs are available from furniture suppliers to make life easier), landlord insurance, factoring charges (for new build properties), safety certificates and installations (required prior to letting and ongoing through the lifetime of the investment), refurbishment costs and an annual property maintenance contingency.
- Learn the market – You’ll want to make sure you ‘know you onions’ to make sure you spend your hard-earned cash wisely. It’s worth investigating what longer-term redevelopments or regeneration is happening in different pockets around the city as this could have a longer term impact on capital values and the popularity of areas from a tenant point-of-view. It’s amazing how properties (and rents) can vary from one street to the next so a high level of local expertise is essential.
- Choose a letting agent – You’ll want to make sure you choose a reliable letting agent to help your Edinburgh property investment journey run as smoothly as possible. A good, qualified letting agent will be able to provide you with rental expertise on property investments and a regulated agent will be able to provide rental valuations which can be relied upon by your lender. It’s best to check out customer reviews online to see what people really think of each letting agents’ service
Umega Lettings offers an investing sourcing service were we find a high-performing property investment in Edinburgh for you, joining the dots of property investment and guiding you through the process, including taking you through the various steps above. For more information on this just contact our experienced Edinburgh investment manager, Chris Wood who will be happy to help.