Top 5 Mistakes to Avoid When Buying Property in the UK
Updated: Nov 10, 2020
We all make mistakes. A typo or two, a missed meeting, forgetting someone’s birthday! However, one mistake no one wants to make has to do with investing money, specifically buying properties. Perhaps you have heard the (horror) stories. A good friend or relative has tucked away a nice bit of cash with high hopes of buying a cheap place with great potential, only to discover disaster after disaster.
Don’t let it happen to you. Keep reading and educating yourself so you can avoid the top mistakes made when buying in the UK. Mistakes will happen and we only learn as humans from making them, failing, and picking ourselves back up again. However, if you can make your mistakes in property investment as minimal as possible, you will benefit from this in the long run.
Mistake #1: Running Away from the Numbers
If you are actually hoping to make some money with property investment, then knowing your numbers is critical. One of the top mistakes new investors make is trusting fast-talking agents who slide over really important details like the cost to refurbish, rental yield amounts, and interest rates to name a few.
This is why we suggest getting a trusted property sourcing agent who is working for you with complete transparency. If you work full time and perhaps don’t have all the time in the world to spend in your investment area and building relationships with a network locally, we suggest hiring a property sourcing agent.
What is a Sourcing Agent?
Put simply, a great sourcing agent will help you find the perfect high yielding investment that most people could not find themselves. Basically, they are the best friend that always has the right “hook up” to help you out. They will usually be building their own portfolio so are already doing all the hard work, so you don’t have to.
This leads us to the next BIG mistake….
Mistake #2: Choosing the WRONG Team
You wouldn’t hire just anyone to babysit your kids (hopefully) or let anyone drive your car, so why let just anyone handle one of the BIGGEST decisions in your life - placing your hard-earned income into a property. Investments in property can be very lucrative and that’s also why they can attract some unhelpful and unprofessional types of people.
How you choose your local sourcing agent is critical - here are some tips to consider:
Check their reviews and past projects
Always review their regulations and make sure they are fully compliant
Ask to see their compliance certificates, these should include membership/accounts with the ICO, The Property Ombudsman, HMRC Anti-money Laundering and the necessary insurance to carry out this work on your behalf
Understand their reputation
Watch out for pushy types that want you to “close fast”
Ask to speak to their past or current clients – find out for yourslef eaxctly what working with them is like
Mistake #3: Ignoring the Floor Plan
Every bought an outfit you were sure would look great only to try it on and realise you had made a huge mistake. Well, unlike clothes, there are no “take-backs” on a home and chances are if you don’t like something others may not either, making it harder to sell.
Instead, consider the floor plan thoroughly. Is there a good flow to the house? Does the room layout make sense for your family’s needs or for your potential tenant? For example, if you are buying a home that needs to accommodate small children but the rooms are far away from the parent’s room or even on a different floor this may not be the best choice for you. Same for a multi-generational family, where upstairs bedrooms may be a challenge your nan or grandparents.
Of course, if this is an investment property – you must work out measurements, so you legally have bedrooms large enough to be marketed as bedrooms. Can you only fit a single bed in or is there room for a king? If your property is going to be a HMO for example, this is critical to get right at this very early stage of the process. There is a big difference in rental appeal, demand and the rent you will get between a single and a double room. This will in turn effect the ROI and yield of the property so do not ignore the floor plan and measurements.
Mistake #4: Ignoring Structural Issues
With all the excitement of getting your own place, don’t overlook major issues that could become major problems down the road. Do you due diligence and read the homebuyer report thoroughly. High-priced issues such as electric, roofing, and plumbing should be considered very carefully. Before you purchase a property, you might also need to get a structural report carried out. Issues such as holes in the roof or wall-ties, could be costly and although it might not put you off the purcahse, these numbers must be included in your calculations before you complete and exchange on the house. These issues can be awfully expensive and if they aren’t factored into your calculations at the start, they could make a great deal become a very average one.
Mistake #5: Getting the Resale Value Wrong
Working the resale value out wrong is a very common mistake and leads to a lot of upset and shock when the valuation comes in for a remortgage, or when you try to sell the property if it is a flip project. Forgetting to think about what the resale value is can be a big mistake. It is vital that you phone local estate agents, as well as study the sold house prices on Right Move and other online portals. These numbers are the facts that the surveys valuing your house will use as a guide and must therefore never be ignored.
It is common to see first-time investors make their done-up value fit to what they would like it to be. This is allowing emotion to get in the way of the numbers which should drive every business decision you make. If the end value is not enough and the property purchase is not a deal, remember – it is okay to walk away. You cannot make the numbers work if they simply do not work.
Before you buy a poperty, always consider the above tips to purchase wisely. Choosing a sourcing agent that can assist you in avoiding these top mistakes can help you and save you lots of money and unnecessary headaches down the road. For more great tips and help contact Winova Properties and take your first steps towards finding your perfect home today!
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