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Nov Sat 1, 2014, 10:50 AM

To Build or to Buy?


Most landlords would have a pretty straightforward answer to that question: buy every time. But, the economic changes we’ve seen over the last few years have given landlords serious food for thought when it comes to deciding how best to invest. Of course, the right decision depends upon your budget, your business and your aims, but here are a few ideas to get you thinking about an opportunity that might have otherwise passed you by…

Building Rental Property

Building is hard work, there’s little doubt about that, but because of that fact, building can be immensely rewarding. Financially, you have more opportunities to add value if you build rental property: you can tailor what you’re building exactly to your specification and you should end up, if done well, with a final property worth more than you started with: from the off you’ll have taken some capital growth.

Then, it’s a case of renting and maintaining the property, but assuming you build everything to a reasonable standard in the first place, you shouldn’t have to work too hard to keep the property maintained. A good landlord insurance policy and vigilant tenants should easily cover any problems, letting you get on with other projects elsewhere.

Buying Property

With the construction industry flagging, the supply of properties to the market is largely fixed, and prices aren’t moving too far in either direction. However, if it’s income you’re after, buying with the intention of letting is the simplest, quickest option. The sooner you can get tenants into a property, the less time you’re paying interest on a mortgage and the more profit you stand to make. Equally, if you buy existing property, it’s a proven success: it’s clear by the fact that someone has lived in it before that there is demand for that particular place. There are none of the risks of selling on a built property and none of the worries about it’s overall success: you’re buying something you know will attract tenants eventually.

If you’re looking to expand your portfolio, it’s likely that the safest and smartest option is to stick to what you know, but never forget; there are other opportunities out there that could make a big difference to your life as a landlord.

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