What Property Investors Should Consider Before Buying
For many people, property investment starts with a fairly simple idea: buy a property, rent it out and build wealth over time.
But before you start scrolling through properties and calculating rental yields, there’s another question worth asking.
Do you actually want to be a landlord?
Property investor and landlord are often used as though they mean exactly the same thing. In reality, there can be quite a difference between wanting property to form part of your financial future and wanting to deal with everything involved in running a rental property.
You might want to build a portfolio and be actively involved in every decision.
You might be happy owning property but want a letting agent to handle the day-to-day management.
Or you may like the idea of property investment but have very little interest in becoming a traditional hands-on landlord at all.
There isn’t necessarily a right or wrong answer.
The important thing is understanding what you’re trying to achieve, how involved you want to be and what responsibilities you’re comfortable taking on before you buy.
Being a property investor doesn’t mean doing everything yourself
One of the misconceptions about property investing is that you need to find the property, negotiate the purchase, manage the refurbishment, advertise it, find tenants and then manage the tenancy yourself.
You can.
But you don’t have to.
There is a spectrum of involvement.
At one end, you might be a hands-on landlord who researches their own deals, manages refurbishments and deals directly with tenants.
Further along, you might own your properties but use professionals such as property sourcers, mortgage brokers, solicitors, letting agents and property managers to support different parts of the process.
And some investors deliberately look for a much more hands-off approach to property.
If you’re not sure where you sit, our guide to Property Portfolio Builder vs Hands-Off Property Investing: Which Approach Is Right for You? looks at some of the differences between the two approaches.
Understanding how involved you actually want to be can help you make better decisions about the type of property investment that may suit you.
Start with your life, not the property
It’s easy to start a property search by asking:
Where should I invest?
Or:
What property can I afford?
Those are important questions, but they perhaps shouldn’t be the first ones.
Start with you.
Ask yourself:
Why do I want to invest in property?
Am I looking for additional monthly income, long-term growth or a mixture of both?
How much time do I genuinely want to spend managing property?
Would I be comfortable dealing with tenants?
Do I want to manage tradespeople and refurbishments?
How would I feel about an unexpected repair bill?
Do I enjoy researching areas and analysing potential deals?
Am I looking to build one or two properties or a larger portfolio?
Would I rather build my own expertise or work with people who already have it?
There’s a big difference between somebody who loves the idea of building and managing their own portfolio and somebody working a demanding full-time job, running a business or juggling family commitments who wants to build longer-term financial security without adding another job to their week.
Your property strategy should reflect that.
And if you know you want to invest but find yourself continually putting it off, you might also find I Know I Should Invest, So Why Haven’t I Started Yet? useful.
Being a landlord comes with responsibilities
It’s also important not to mistake property investment for completely passive income.
When you rent out a property, you’re providing someone with their home. With that come real responsibilities.
Landlords need to understand the rules and responsibilities that apply to them, from the safety and condition of the property through to tenancy management, deposits, maintenance and the wider regulatory environment.
The rules around renting are continuing to change too, including reforms introduced through the Renters’ Rights Act.
That doesn’t mean becoming a landlord is necessarily a bad investment.
But it does reinforce something we believe strongly at Rosebay Property:
Investors should understand what they’re getting into before they invest.
Good property investment isn’t simply about calculating the potential yield and buying a house.
It’s about understanding the property, the numbers, the area, the risks, the responsibilities and whether the investment makes sense for you.
Do you need to become an expert in everything?
No.
One of the advantages of property is that you can build a team of professionals around you.
A mortgage broker can help you understand your finance options.
A solicitor handles the legal side of your purchase.
A property sourcer can help identify and assess potential investment opportunities. If you’re unfamiliar with that part of the industry, our guide What Does a Property Sourcer Do? A Complete Guide for UK Property Investors explains more about the role and what investors should expect.
Tradespeople or project managers can support refurbishment works.
A letting or managing agent can handle much of the day-to-day management of a rental property.
Accountants and tax advisers can help you understand the tax implications of the decisions you're considering.
Using professionals comes at a cost, of course, and those costs need to be properly reflected in your investment calculations.
But sometimes the question isn’t:
“Can I do this myself?”
It’s:
“Is doing this myself the best use of my time?”
For a busy professional, business owner or parent, those can be two very different questions.
Some investors genuinely enjoy being landlords
There are plenty of reasons why investors choose to be more hands-on.
You might enjoy finding opportunities, improving properties, building relationships with local tradespeople and gradually developing your knowledge.
You may want greater control over decisions.
You might enjoy seeing a tired property refurbished and turned into a good-quality home.
And you may have the time and appetite to become knowledgeable about the operational and regulatory side of being a landlord.
Property strategies such as Buy, Refurbish, Refinance (BRR) can also involve a much more active role, particularly during the acquisition and refurbishment stages.
If that appeals to you, becoming more involved may be part of what makes property investing enjoyable.
But you don’t get extra points for doing everything yourself
This is something new investors sometimes need permission to hear.
You don’t have to become a full-time property expert for property to play a role in your financial future.
If you have a career, family, business or simply other things you’d rather spend your time doing, you can choose to build a professional team around you.
Equally, paying somebody else to do something doesn’t remove your responsibility to understand the investment you’ve made.
Being hands-off shouldn’t mean being uninformed.
You should still understand where your money is going, what assumptions have been made, what the risks are and why a particular property or strategy fits your objectives.
There is a difference between delegating and switching off.
Think about the difficult days too
It’s easy to imagine property investment when everything is working.
The tenant pays their rent.
Nothing breaks.
The property increases in value.
The spreadsheet looks exactly as predicted.
But good investment decisions also consider what happens when things don’t go perfectly.
What happens if the boiler needs replacing?
What happens if the property is empty for a period?
Could you cope with an unexpected repair?
What happens if your finance or operating costs increase?
What if the refurbishment costs more than expected?
Would you know who to call if something went wrong?
And do you have enough contingency available to deal with the unexpected?
None of those questions are designed to put you off property investment.
Quite the opposite.
Understanding what could go wrong allows you to plan for it before you invest.
The individual property still matters
Once you understand the type of investor you want to be, you can start looking at the investment itself.
And this is where it’s important not to become distracted by headlines about the “best” places or strategies.
A strong investment area doesn’t automatically make every property within it a good investment.
The price you pay, achievable rent, property condition, financing costs, refurbishment requirements, local tenant demand and your intended strategy all matter.
For example, if you’re considering Stoke-on-Trent, our guide to Where Are the Best Areas to Invest in Stoke-on-Trent? Why the Postcode Doesn't Tell the Whole Story explains why we believe investors need to look further than a postcode when assessing an opportunity.
Ultimately, the individual property still has to stack up.
So, do you actually want to be a landlord?
Maybe.
But perhaps the more useful question is:
What role do you want property to play in your life?
You might want to build a sizeable portfolio and gradually become an experienced landlord.
You may want a small number of professionally managed properties that you hold for the long term.
Or you may decide that a more hands-off approach better suits your available time, knowledge and financial objectives.
All of those decisions can be valid.
What matters is that your investment strategy is built around your goals and circumstances, rather than simply following what somebody else is doing.
Because buying an investment property isn’t the goal in itself.
The property is a vehicle for whatever you’re ultimately trying to achieve.
Getting clear on that first can make every decision that follows a little easier.
Considering property investment?
At Rosebay Property, we believe the conversation should start with the investor, not the property.
That means understanding what you’re trying to achieve, how involved you want to be and what type of approach might fit your circumstances before looking at individual opportunities.
Whether you’re considering building your own property portfolio or looking for a more hands-off approach, you can book an introductory conversation with Rosebay Property to talk through what you’re looking to achieve.
Property investment involves risk. Property values and rental income can go down as well as up, and costs, taxation and regulation can change. Information provided by Rosebay Property is for general educational purposes and should not be treated as financial, tax or legal advice. Investors should take appropriate independent professional advice before making investment decisions.
