The question as to whether property investment is profitable in 2024 is a complex one. 2023 was tumultuous in terms of huge spikes in interest rates which slowed down the property market in general. Things are beginning to become slightly more stable moving into 2024 so it is a much better time than last year to get into property investing. However, to help you decide whether or not this is a viable path for you in the current climate, we’ve got some key questions to ask yourself to help make the decision a bit easier.
Are You A Cash Buyer?
First up, if you’re a cash buyer, then property investment will likely be profitable for you. At the minute, house prices are on the decline, whilst interest rates are high, which puts cash buyers in a strong position. Whilst it’s unpredictable whether house prices will keep declining in the coming years, if you’re planning on keeping your property and renting it out, then you’re in a very strong position. Or, if you want to buy it as an investment and are planning a relatively long renovation to give the market a chance to stabilise again, this is also a good option.
If you’re not a cash buyer, don’t discount property investment completely, as interest rates are beginning to drop. However, to make this profitable, having a decent-sized deposit will likely be needed to bring the interest rate down on your mortgage. Speak to a mortgage advisor either way and they can help you find the best course to see whether this will be a viable and profitable investment for you.
Are You Able To Complete Most Of The Renovations Yourself?
We all know that property investment is more profitable when you can complete the majority of the renovation yourself. However, this is even more the case now. The cost of labour has increased quite significantly over the last few years, with labour increasing by 30% in Britain since Brexit. So, if you’re planning on outsourcing a lot of your work if you’re renovating, you need to take this into account.
The vital thing here is to make sure you don’t overestimate what you’re able to do yourself just to save money. The last thing you want is to end up doing something wrong then not only having to pay to have the damage resolved, but then you’ll have to pay for another lot of materials and then the professional labour on top. So, make sure that you know exactly what you’ll need to outsource based on the property and surveys, to decide whether or not the investment is going to be profitable. Saying that there are still things that anyone can do to improve the visual quality and value of your house such as mowing your garden with a lawnmower to make your home more appealing to buyers.
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Are You Going To Sell Or Use As Rental Property?
Something else to consider when you’re deciding whether a property investment is going to be profitable is whether you plan on buying, renovating and selling, or whether you’re looking to buy as a rental property. If you want to buy, renovate and then sell relatively quickly, then it’s not guaranteed how profitable your investment will be, as house prices are on the decline so you may not end up making what you want to from your investment.
However, if you’re looking to buy-to-let, then this is likely to be a profitable investment (of course only if you do your research). Rental demand is increasing significantly, particularly in some of the major cities including Manchester, Nottingham and Glasgow, which also happen to have some of the UK’s highest rental yields. If you are investing in these cities and it will be flat, then just make sure to check any implications about cladding, ground rent and service charges, as this can significantly add up each month and cause your profit margin to drop.
Is This Something You’re Passionate About?
Last but not least, you need to ask yourself whether this is something you’re passionate about. No matter which route you take, property investment can be quite a stressful process, so if this isn’t something that you care about or are passionate about, then it can take its toll. It’s common for things to go wrong, costs to increase unexpectedly and timelines to be skewed, so if you’re not all in before you start, then you’re likely to not complete the project to its full potential.
Final Thoughts
Property investment can be a very good and profitable path, as long as you make sure you’ve properly planned. It is important to ensure that you have a good understanding of what renovation projects you can realistically pull off without the very real risk of making things worse. You may want to just stick to breaking the lawnmower out and cutting your grass if you are unsure of your handyman skills.
