Naturally, most investors have a goal of earning a regular income from their property investments. Some people say buy-to-let property investment has become less profitable than it used to be, but there are ways to create a monthly salary for yourself. However, it takes time to build this up.
Here’s a guide for making your property investments pay a monthly salary.
Build up a diversified portfolio of property investments
It’s difficult to live off the income from just one property investment, so as you build up your property investment portfolio, there are likely to be more opportunities for you to make a solid monthly salary.
The key is creating multiple income streams through your property investments. Diversifying your investment portfolio can also be helpful. Keep in mind that it can take a lot of capital and time to create several decent profitable income streams through your property investments, so it won’t happen overnight.
Earn rental income
With buy-to-lets, the goal for all property investors is earning rental income that exceeds mortgage payments. It’s important to look into the costs of buying, owning and maintaining a property investment and ensure that the rental income is more than these costs added up.
Prior to purchasing a property investment, it’s important to do your due diligence to ensure you can earn a rental income. If you’re able to buy a property without a mortgage or can pay off the mortgage repayments, this can allow you to earn more lucrative returns.
Create positive cash flow
Make your income greater than your expenses. Then, you can use your positive cash flow to pay down your mortgage repayments or grow your portfolio. When you create a property portfolio earning positive cash flow, you then have the ability to be able to further boost your portfolio and create a higher monthly salary.
You could even sell off a property, especially if you are expecting to earn capital growth on it. Then, with the money from that sale, you could look at paying off the mortgage repayments for another property or buy an additional property with cash. Once you get to the point where you own a property outright, your major expense of mortgage repayments will disappear, and your income will shoot up quickly.
Prioritise areas with strong rental demand
Over time, rent will nearly always increase over time mainly due to inflation, but this is only the case as long as supply and demand remain consistent. Recently, many tenants across the UK have seen their rent increase. With demand for more properties in the rental market, rent is expected to continue to rise, especially in areas with strong rental demand that’s not being met by supply.
Invest for the long term
If you’re looking for a property only for the short-term, you don’t leave yourself much room to earn a profitable monthly salary, as it takes time to build up income streams through property investment.
Additionally, there are longer term trends that support the future performance of the UK property investment market. Investing in property for the long-term has proven to be an effective form of financial investment in the UK, but it’s important to do your due diligence with any property investment.
At PropertyMenu, we present and calculate property deals consistently based on a tried and tested deal calculator to help you have full clarity on the numbers behind a potential investment opportunity, including estimated rental operating costs and investment projections and figures. This can help you make an informed decision on whether a property will help you earn a monthly salary.