If you’re considering buying a property in Eastbourne
to rent out, or renting out a property you already own, then your chief motivation will be to make a return on your investment. But how exactly is this achieved?
Landlords can make money in two ways – capital growth, and rental income.
Capital growth
This is when your property increases in value. The capital growth return is the money that you make on the property when you sell it, minus the price you paid for it.
Recently the appreciation on house prices has been extremely high, in Seaford as well as the Eastbourne area. Property has been a fantastic investment for many people, and there is no shortage of people who have made substantial capital returns. Property tends to increase in value over time, but there are no guarantees in life, and this is especially true of the property market. The value of the property can go down as well as up.
The local conditions will also be a factor in how much capital growth that you make. For example, if the government decides to build a train line going past your property then the sale price may suffer.
The best way to make a good capital return when you choose to sell your property is to find the right property in the first place. Well-chosen properties are unlikely to depreciate. If you’re in any doubt, come and see us. Local letting agencies know a vast amount about the local housing market. They will be able to point you in the right direction if a substantial capital return is a priority.
Rental Income and Property Management
The rental income comes from your tenants. It’s the money that they pay you in rent, minus any costs that you incur as a result of renting out the property.
The rental income that you receive will, hopefully, grow over the course of the tenancy.
Again, buying the right property in the first place is the key to achieving a good rental income. You need to find a property that is in demand and is in an area where rental prices are relatively high when compared to house prices. However, the house prices also need to be rising at a reasonable rate to guarantee good capital returns too.
This may sound like a tricky proposition, and that’s because it is. It’s vital to fully understand the housing market in your chosen area or consult an Eastbourne letting agent who understands which properties work well for the rental market, and how to fill them with good tenants.
