During the first few years of your medical and dental career, investing in your future might be the last thing on your mind. But it’s important, once you get comfortable in the field, for you to think about a solid plan for how you’ll replace your income once you reach retirement.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
These days, it’s no longer sufficient to just hope for the best – you need to have a solid portfolio that will provide the lifestyle you want once your working days are over.
Traditionally, property has been the cornerstone of an investment plan because of the significant return yielded.
Unfortunately, the housing market is not what it used to be and experts don’t foresee a return to the glory days any time soon.
That’s not to say that investing in property won’t net you a profit, but you will need to be smart about it.
You’ll need a clear, concise financial plan, market knowledge, and be hands-on when it comes to managing your business – because that’s exactly what it is when it comes down to it.
Building your plan
Besides gathering start-up capital, the first step to make towards property investment is to decide which type of return you’re interested in as it’s usually difficult to find something that will work both ways:
- generating income, which will produce money for you throughout the life of ownership, or
- value growth, which will provide you a hefty return when it comes time to sell.
Partnering with a financial advisor in the early stages would be highly beneficial to help you understand exactly what each scenario will look like.
You’ll also need to figure out how much you want to be involved in the management of your property. Do you want to be a hands-on landlord or let a property management company take the reins?
Being a landlord is no easy job – there’s tons of regulation and legislation to wade through, and the potential to be hit with costly fines if you aren’t in compliance.
It might seem worth the hassle with one or two properties, but if real estate is a big portion of your investment portfolio, working with professionals might be well worth the added cost.
Research, research, research
Once these important decisions have been made, you should dive headfirst into research. Where are you going to buy? What kind of property will you purchase?
Get in touch with real estate professionals to pick their brains – their knowledge will prove invaluable. The internet will be another resource for you, with access to hundreds of listings right at your fingertips, you’ll be able to make informed decisions about the property you’ll invest in.
Know when to fold
While your investment may be fruitful, the end game is to net a profit. No matter what you’ve decided as your ultimate goal for your investment: short or long term profits, you’ll need an exit strategy.
Sometimes the market might not be in a seller’s favour and you’ll need to delay until there’s an upswing, or personal circumstances might change that merit a pivot in your plan.
In the event that happens, make sure you have a back-up plan for securing cash if needed.
What will also heavily impact your decision is how much tax you’re willing to part with – because no matter how you plan to get rid of the property, there will be tax owed.
Speak to an expert
If you have been working with a financial advisor, they’ll be able to expertly advise you on how the property (and subsequent sale) will fit into your overall financial plan so the amount of tax you pay is minimised across the board. They’ll also be able to help you monitor the performance of your investments and provide guidance when it comes time to make the hard decisions.
We’re here to help you build a comprehensive investment plan that you’re comfortable with and will be happy to review your investments on a regular basis, help you keep them on track, and advise you if we feel that any changes need to be made along the way.
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Dental & Medical Financial Services have been helping doctors and dentists with finding low-cost mortgages for your home and investment properties for over 25 years. Call Chris to discuss your options.
Tel: 01403 780 770