3 Factors That Influence a Property Investment Decision
Property investment requires careful thinking and profiting from your decision. 25% of Brits perceive property investment as the safest method to secure the future, especially regarding a constant revenue generation in the golden years. Furthermore, location, annual property tax, and property volume hold the most significant value in property investment decisions. That said, here are three factors that influence a property investment decision.
A good location amplifies property desirability, making it a basic rule in property investment. Property buyers will stop at nothing to clinch a good deal in a location which adds value to the building. However, you should note that location works hand in hand with other determinants. For example, various access routes, proximity to the public transport network, and essential social services (schools, shopping malls, etc.) are vital.
Buyers invest in property for various purposes, but the two key reasons are self-occupancy and resale. Self-occupancy can be for residential or commercial intents while buying for resale can be immediate or later. Whatever these secondary reasons are, you cannot doubt that location plays a critical role in influencing a property investment decision.
The physical condition of the property
This includes maintenance and ongoing repair works being carried out on the property in question. The cost of maintaining a property is varied depending on the following factors:
- Physical size
- Age of the property
- Immediate environs (is it in a hilly area and so on)
The general rule in real estate is that property appreciates, making it a credible investment option for many people. However, it is difficult to stick to this as a profitable investment when the building’s physical condition is unimpressive. Unless you are willing to renovate and bring it up to the standard you want, you will lose out from having made a bad property investment judgment.
You can also purchase fixer-upper properties in not-too-good-condition for less in a good neighbourhood. However, the condition for getting it at a reduced price stems from a commitment to tackle all renovations that must be undertaken. Therefore, you must carefully consider your options before you commit. It will be helpful to use high quality building supplies to increase your property’s value if you decide to purchase a fixer-upper.
Annual property taxes and land rates
The following is a breakdown of annual property taxes in the UK:
- Any property below £40,000 is 0%
- 3% for properties worth £40,001 up to £125,000
- 5% for properties ranging from £125,001 to £250,000
From the breakdown above, it’s easy to see you pay more tax for more expensive properties. Fortunately, there are exemptions to land rates in the UK, some of which include:
- Buildings meant for the welfare of the disabled in society
- Structures registered under public religious worship
- Agricultural lands/buildings
If this is influencing your decision, you also need to think about the possibility of how you are going to pay this. If you want to rent the property out, saving some of the rental income each month and putting it towards paying this off would be extremely helpful. It’s worth thinking about if you believe that you could make a good profit from renting. Just remember if you decide to rent out the property, you need landlord insurance to protect yourself, and you need to look into all of the specifics about renting before you commit.