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Being property wise

Do your homework before investing in a buy-to-let property.

Bricks and mortar has always been a solid investment in Malta. True, like any other market, there are ups and downs in real estate. However, by and large, property is one of the safest and wisest investments you can make.

In recent years, the buy-to-let market has gained plenty of ground in Malta. This is due to a number of favourable factors. First there is the greater availability of property in all areas: whether you are considering an apartment in Valletta, a townhouse in Sliema or a property with a view in the north of Malta, you have a vast and varied choice.

Another favourable condition is that there are more tenants on the market, which naturally has increased the rental value of properties. Thanks to job mobility, there is a strong foreign workforce in Malta: foreign workers might not be willing to buy a property, especially if they have a fixed short-term contract. This means that they will naturally rent.

That said, like any other investment, buy-to-let doesn’t come with any guarantees. Moreover, it’s not something you can go into without any effort.

First of all, there is an element of research. If you have a sum of money to invest but are new to the buy-to-let market, consider other investment options. Compare buy-to-let options with other investment opportunities, such as investment funds or a business start-up. Which option has the potential for the highest returns? Moreover, do your income tax sums: on which type of investment will you be paying the highest tax rate?

Moreover, if you are buying a buy-to-let property, do you need to take out a loan? And will your returns cover your interest rates and leave you with a nice little profit? Also, don’t stretch yourself – will you be in financial trouble if your property stays vacant for a couple of months? The more research that you carry out, the better the chances of your investment paying off.

Also, don’t stretch yourself – will you be in financial trouble if your property stays vacant for a couple of months?

You also need to research the local property market to see which property in which area attracts the longest rental periods and the highest rents. Your choice of location and property also depend on the tenant that you are planning to target. If your target tenants are students, then you need to invest in a property that is comfortable, but not luxurious, and which is close to public transport connections and to educational institutions. If, on the other hand, your target tenants are young professionals, you need to invest in a modern property that is close to entertainment areas. For higher-end tenants, consider luxurydevelopments or a farmhouse in the countryside which can attract premium rates.

When you have bought your buy-to-let property, you need to decide the amount of money you will invest in doing it up. Again, this depends on your target tenant. The more you invest in sprucing up or redesigning your property, the greater the value your property will gain, and the longer your tenants will want to stay.

Also, decide how hands-on you want to be. If you have the time, then rent it out yourself and avoid an agent’s commission. However, if you cannot afford the time and renting out property is something you do on the side, then go through an agent.

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