Buying or entering into real estate business is not simple. you need to have sufficient knowledge which will allow you to make the correct purchasing decision. When getting into real estate, ask as many questions as you possibly can. We will tackle some of these questions.
- Is there a difference between commercial and residential real estate?
Yes, there is, residential real estate deals with anything for residential use including flats and apartments. Commercial real estate deals with direct profit-making ventures, for example, hotels shops, student flats amongst others. Commercial real estate is more stable as the value depends on profit while residential is more about location and access to amenities like schools hospitals amongst others.
- Is there tax levied on rental income.
Real estate rental income is taxable income. However, the first 11,000 pounds attracts 0% taxation. Get a bookkeeper to file your income to make sure you are complying with the regulations.
- What is the difference between freehold and leasehold?
Freehold is when you own a piece of property for eternity. Ownership under leasehold is for a limited period of time usually between 125 to 999 years. Most residential properties are under freehold while commercial tend to be leasehold.
- What does conveyancing mean in real estate?
Conveyancing is the legal transfer of property or encumbrance from one person to another.
- What is due diligence in real estate?
Due diligence is the process of doing extensive background research before you purchase a property. It includes land search, owner search, document search, site visits amongst others. For instance, doing due diligence on a piece of property can tell you if it has court disputes or caveats if it has proper documentation, the history of ownership amongst others.
Due diligence could save you from making costly purchasing mistakes.
- Is it better to buy a ready house or to build?
This really comes down to an individual’s preference. Some may prefer to buy a ready house so that they do not have to deal with the building process, while others prefer to build. When buying a ready house you take the property as is and cannot customize it to your taste. When building there are many factors you need to consider like getting approvals, house-plans, which contractors you are going to use, purchase of building material, landscaping, amongst other issues. Since you have complete control of the process, you can customize the house to how you want it.
- Is it a good idea to buy a house off-plan?
Buying property off-plan means you buy before the developer has started the construction process. This can be tricky for some people because you do not have a tangible asset that you are actually buying. However, off-plan houses have better prices because, in an effort to entice people to buy the property the developers give discounted prices. Make sure that you know who you are dealing with and that they are creditworthy and can finance a project to the end. Also, check that they have insurance so that you can get your money back in case the project goes bust before completion.