Twenty years ago, real estate investment usually meant buying a run down house and flipping it to sell it for a profit. Alternatively, some investors would rent out their newly acquired properties. Nowadays, you can invest in property companies who do all of the hard work for you. So with that in mind, today I am sharing some things to consider before investing in real estate. I will cover aspects including house flipping, property investment and becoming a landlord.

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Things To Consider Before Investing In Real Estate

When I was a child, my Dad was always flipping a house. He was a joiner by trade and worked 8-5 through the week. As well as this, he spent a lot of his evenings and weekends working on the house he was currently flipping. This work was a labour of love, and he’d make a few thousand pounds on most of the properties. This came at a great cost though – he rarely saw his partner or children, and socialising was rare.

Things have moved on since then, and now you can be involved with real estate investment without being a millionaire or spending every spare minute fixing up a place yourself.

Using A Property Investment Company

If you have a lump sum of over $5000, you may want to consider real estate investment as a more viable option to house flipping. This option sees you handing over your money to an investor for a minimum of 10 years. So only consider it if you’re sure you won’t need the lump sum back before then.

On average, most investors will see a return of 6-15% on their investment. So if you hand over $10,000 you can expect to make anywhere up to $1500 during the 10 years your money is tied up. This Cardone Capital review explains the ins and outs of how it works far better than I can, so check it out to learn more.

The risks involved definitely set off alarm bells for me. So I don’t think I’ll be handing over any money to real estate investors any time soon.

Flipping Rundown Houses

If you are considering buying a run down property and then flipping it to sell on… Be sure you’re aware how much work is involved. Sure, a few coats of paint and some new flooring won’t cost that much in time or money. However, should you need to rewire the electricity or replace the plastering… The costs and the time involved will skyrocket quickly.

Additionally, flipping properties to sell on depends on you finding a buyer quickly. Otherwise, your expenses will eat up all of your profit. So it’s a gamble if you need to take out a mortgage or loan to purchase or fix up the house.

Rental Property

If you decide to keep the property and rent it out, you’ve got the added risk of finding good tenants. Additionally, you’ll be responsible for repairs and damages. You can get Landlord Insurance to cover these, but your premiums will go up with each claim, so it’s something to consider. The fact you will own the property and it’ll be some financial security is a big plus though. If I could afford to buy, renovate and then rent out properties… I’d definitely be opting for that when considering investing in real estate.

Finally, if this post on things to consider before investing in real estate has been useful, check out this post on saving for your financial future.

If you’re self employed like me, chances are you hate doing your taxes. Whether you’re in the UK and are filing your tax returns online, or you’re elsewhere and regretting not sorting receipts sooner… There’s got to be an easier way. Today, I am discussing ways to make filing your UK tax returns easier. I’ll also be asking when do you need to consider an accountant? Read on to find out my thoughts.

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When Do You Need To Consider Hiring An Accountant?

I’ve been self employed for several years now. Submitting my online tax return is definitely not my favourite thing to do, but I’ve got a few hacks to make it easier, and avoid the need for an accountant… For now anyway!

Last year, I shared these free income and expenses templates for bloggers. They make it a quick and easy job to update your income, expenses and net profit as you go along. Firstly, I spend around 40 seconds adding a line of information to my “income” spreadsheet every time I submit an invoice. Then I spend around 15 seconds adding the payment information when the invoice is paid.

Additionally, I add any purchases and expenses to my “expenses” spreadsheet as and when I make purchases or pay invoices. Then on the 1st of each month, I spend 30 seconds adding my monthly income and expenses for the previous month to a “net earnings” spreadsheet to work out my net income for the month. Honestly, these spreadsheets have made filing my tax returns a 30 minute job!

Considering An Accountant

At this point, I don’t think I need to seriously consider hiring an accountant. If you’re in America and are in a position to consider hiring one… It’s worth considering a Sales Tax Consultant instead. Personally, I don’t really understand sales tax compliance. So I’d probably be floundering if I were trying to submit my taxes on the other side of the pond.

How Does Sales Tax Work?

In the UK, we have VAT (value added tax) which is added onto the price of certain things. This is set at a rate of 20% and is included on the ticket price. So what you see is what you pay. In the USA Sales Tax varies from state to state, and also from City to City, within the same state. It ranges from 0% in Montana to 13.5% in Alabama.

When you go into a store, the price on the shelf does not include Sales Tax. So the same item’s price will vary from one City to another – even in the same state. If you went into a Target in Alabama and picked up a $20 item… You’d pay $2.70 more for it than you would in Montana. This tax is collected by the retailer and they then have to make sure their tax bill is paid.

So when considering when do you need to consider an accountant, it’s a no brainer for any retailer in the USA to hire one or use a similar service. This is to ensure their sales tax compliance is 100% correct.

So it’s the start of a new decade, and chances are, you have been scouring the internet for tips on improving your finances. On my own financial journey, I have found lots of little ideas, which added up to making a big difference to my finances after a year. Read on to find out more.

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Tips On Improving Your Finances

When I decided to look for ways to improve my finances… I noticed that almost every site tells you to work out your essential outgoings and regular incomings first. So that’s what I did…

Work Out Your Essential Monthly Outgoings

The first thing I did was sit down and work out my essential monthly outgoings. This included all of my bills, fuel, food, etc. I then subtracted this amount from my total monthly income to work out how much disposable income I had each month.

Disposable Income

Knowing how much I had left after bills each month meant I could work out how best to clear my debts. I knew I had £500 per month available to use however I chose. So I opted to pay £200 of that off my overdraft. This would mean I’d have it paid off within a year. Also, I’d then have even more disposable income the next year.

Mortgage Tips via Clay Advisors

I found lots of useful tips and ideas from Clay Advisors. The one which really stayed with me essentially said…

If you were to reduce your spending on non-essential personal items by £100 per month… You could use this money to pay off your mortgage early. So that means on a £130,000 30-year mortgage… The extra £100 per month could allow you to pay it off 10 years early, as well as save you thousands of pounds in interest payments. Knocking 10 years off your mortgage seems like a no brainer to me!

Paying More Than The Minimum Payment

I have a credit card, and for a long time, I only paid the minimum amount each month. Eventually, I realised that 80% of that repayment was covering the interest, so my balance was hardly reducing. In the end, I applied for a balance transfer credit card, which offered 2 years 0% interest on balance transfers. I paid a 3.5% fee for doing the transfer, but that was less than the equivalent of 2 months’ interest fees. I then paid the same amount back each month, and I will have cleared my credit card in full by the end of the 0% period – HOORAY!

Cutting Back

All of the above was achieve by cutting back on some activities, which were eating up a fair amount of my disposable income before. I haven’t totally given up on my treats though. I have joined Quidco, and have saved hundreds of pounds shopping via there for stuff like broadband suppliers, Christmas gifts and appliances for the new house. Additionally, I have been using groupon to get great deals on stuff like haircuts, days out with the kids and meals out for special occasions. It’s amazing the deals you can find online now!

Finally, if these tips on improving your finances have been useful, check out my Finances category.