Buying a property – whether as a buy-to-let investment or as new home for you and your family – is a big deal. It’s more than likely one of the largest investments you’ll make in your life, and there are a myriad of things to consider before you take the plunge. Of course, you’ll need to make your own judgement on different properties based on their individual merits and your own personal circumstances, but here are Holborn Assets‘ thoughts on just a few of the things you should look out for when you’re thinking of investing in bricks and mortar.

We’re going to assume that you’ve already considered the basics – making sure that you have the finances in place to invest without impacting your lifestyle too seriously, researching similar properties on the market in the area that you’re considering buying in, and of course thoroughly investigating the property itself for any hidden problems. It’s the kind of due diligence that should proceed any investment – but what else should you look out for?

Understand value

When it comes to investment properties, value isn’t about the relative property prices of different areas. Some areas are cheap and some are expensive – but what you are looking for are those properties that will give you the most added value on the investment you can afford. And for us, this means finding those properties that will give you a regular income over a long period, rather than just looking for a big return on your initial capital.

So, look carefully at rental yields in the area, rather than just focusing on house prices and recent sales – it will give you a much better idea of how much the property you’re considering will give you back on your investment. To get this kind of regular income, you’ll need tenants – but what represents added value for them? Is it good schools, or tube stations, or green spaces? All of these factors will determine the attractiveness of your property to the kind of people who will be able to pay you a regular income on your investment – and this is what we believe you should focus on, rather than hoping for future house price rises and a big pay day when you eventually sell.

Is property really the best investment option for you?

What are you investing for? If you’re buying a property as an investment for something like your retirement and are considering letting it out as a landlord, you might want to think very carefully about the actual costs of the investment, and whether it really offers the kind of value you’re after. Stamp duty for landlords is 3 per cent higher than it is for homeowners. Some local authorities will charge landlords to register with them. You may also need to pay out considerably higher amounts on surveys and legal fees, as well as invest heavily in improvements to make sure the property is health and safety compliant for your new tenants. The costs don’t stop there either – if and when you choose to sell, legal and estate agency fees will take another chunk out of that initial investment.

All of this could run into the thousands, so make sure you consider this and deduct it from the total you imagine you’re investing. What could have been a £200,000 initial investment elsewhere could very easily turn into a £170,000 investment in property: as the experts at say, ‘buy a £140,000 buy-to-let and the taxman will take £4,500 – stick your £40,000 deposit in a pension instead over two years and he will boost it to at least £50,000’.

But despite all of this, there are big advantages to investing in property – not least that you can increase the value of your investment yourself, by working hard to improve the property itself (something you certainly can’t do with stocks and shares). And of course, if prices rise, you can still make big gains.

Property still remains a great investment option – but make sure you’re ready to be in it for the long haul.