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Cardiff property investment costs
Naturally, there are other costs associated with property investment, which need to be factored into the above, to give a few examples of items which need to be considered:
- Void periods - can you fill your house 12 months a year, every year? Are you letting to students, where it is the norm to offer half rent over July and August. If you are going to carry out renovation then you need to consider the lost rental income, as well as the cost of the renovation works.
- Tax - Gross profit is before tax, you will have to pay tax on any profit. All your properties are counted as a single business, so a loss in one can count against a profit on another, but not against other income tax bills.
- Maintenance - There will be on-going costs associated with the property, such as gas safety certificates, re-decoration, repair works, all of which need to be factored in.
- Service Charges - Apartments usually have a service charge, but these apartments usually require less maintenance, so this all needs considering. Ask to see the next five years maintenance plans as service charges can rise and fall. Sometimes, these service charges can include water, which can act as a selling point to prospective tenants.
- Letting Agency Fees - Letting and management fees need to be factored in to your calculations.
- Insurance - Your lender will insist on buildings insurance, and it is wise to have contents insurance if your property is furnished. There are a wide range of insurance products to pick from, including rent guarantee insurance to complete cover for your portfolio.
- Capital gains - Was your property bought under value? Is it likely to be worth more when you sell it than you bought it for? Or maybe, you could be in a position where you need to sell, when house prices are at their lowest. These items all need considering.
Your will also need to take specialist tax advice. There are a number of tax reliefs available for property investors, including allowing for wear and fair, but also a number of scenarios where you may have to pay tax, such as capital gains tax when the property is sold on. The cost of these taxes will depend on other income, and an accountant will be able to advise you further.
Property investment has to be considered on a case to case basis, and not everything can be worked out in a formula. The returns on property investment can be excellent, but you will have to work harder for your money than having it sat in a bank.
Property investment in Cardiff is an excellent option. It is a young, vibrant capital with one of its major selling points for property investment being the vast university market, which employs a huge number of staff, and of course the students.
There is still massive potential is developing areas such as Cardiff Bay, and now the days have passed over inflated prices, there are some excellent returns to be had when the correct property is purchased, with property prices to suit all pockets.
In the current media frenzy of dropping property prices, Cardiff is holding its prices better than the UK average. What's more rental returns in Cardiff are excellent, higher than in London.
If you have a property and would like to know the potential rental income from it, then please book in for a no obligation rental evaluation