Armchair Property Investment – Should you leave managing your property portfolio to the experts?
According to recent research, property investment has been shown as the preferred method of investment for generating returns for 40% for Britons and over half (55%) would consider playing an active role in managing their investments. (Source: YouGov survey commissioned by spreadbetting provider InterTrader).
Whilst it is well recognised that a good property investment can bring better returns than stocks, shares and pensions, the key questions is how much control should you take in managing your investment – or is it wise to leave it to the experts?
The biggest challenge for an investor is finding tenants. It is important to secure the right tenants to ensure your property is cared for; the rent is paid on time; and you prevent void periods. Deciding where to advertise your property; screening tenants; sorting the tenancy agreement; and organising the inventory can be time consuming. And the longer it takes to find tenants, the less revenue you will have.
Agents’ fees for a yearly management charge will probably equate to two months’ rent. A good agent will have a waiting list of potential tenants ready to move in as soon as the property is vacant, almost paying for their service immediately.
Agents will charge between 10%-15% to manage your property portfolio. But in the case of student lets, it is usually only 1%-1.5% of the total yield, still leaving a very healthy 9-10% return on investment each year.
If you have an agent looking after your property, all you have to do is check your bank account
to make sure your investment yield has paid. You won’t have to worry about obtaining the correct licenses and keeping them up to date; paying utilities; organising repairs; resolving tenant complaints; chasing rent arrears; and providing the annual gas, electricity and PAT certificates . Some local council require you to get HMO selective licences and if you don’t have this you can be liable for a fine up to £20,000.
Another important consideration is that if you want to purchase the right investment property, regardless of its location in relation to where you are based, you can do this as an ‘armchair investor’. You can take advantage of some of the best yields across the UK, for example student accommodation in the North West, with the help of the right property investment firm.
The secret to a successful ‘armchair’ investment is to work with the right partners. It is important to buy from a developer with a proven track record; use a letting agent that specialises in the rental sector you are looking to be in eg student, residential, DSS, commercial or retail. Each of these is a specialist field and if not undertaken by an experienced agent, can lead to the failure of a potentially good investment.
If the property investment is to provide an extra income or a pension, it is best to use an agent. But if you want to be a full time investor, and have the time to do so, go it alone. Whatever you do, make sure you carry out thorough research, before making any decisions on how you will manage your investment.
*Mish Liyanage is Managing Director & CEO of the Mistoria Group
For further information, please visit: www.mistoriagroup.com.