If you’re a newbie to the property investment sphere, then you need your initial investment to be a savvy one, so as to stand your future plans in great stead. You want to get off on the right foot and get a great return the first time around and there are many out there that will tell you from experience, that success is by no means guaranteed.
With that in mind, we now look at 10 things that first-time property investors really need to focus on to give themselves the best chance of making success happen by making the right decisions.
1. Create a checklist and follow it
There’s a lot to consider when buying a property and in a scenario like this, it’s easy to forget things. Having a checklist allows you to be methodical and go through what needs to be done step by step. A simple pad and paper will do, so long as you start at the beginning and try to plan out everything that needs to be done from sending paperwork to organising getting your surveys done. That way, you won’t forget anything important.
2. Think of It as a business
Buying a property as an investment is very different from buying a home to live in and as such, it needs to be approached accordingly. Emotion plays a much bigger part when buying a home or yourself as you go through the mental process of imagining yourself living in it. Emotion needs to take a back seat in property investment, as otherwise, you can end up overpaying and rather defeating the object of the exercise – making money.
3. Do your research
It may seem like an obvious tip, but arming yourself with as many facts as you can find will prepare you very well to make sound decisions. There are 1,001 available books on the subject and there’s much you can find on the internet to help you learn the ins and outs of property investment. There are publications regarding investment strategies, how to manage cash flow and much more, all at a relatively low cost.
4. Set yourself some financial goals
When you get into property investment, you need to have some idea about what it is you want to achieve from a financial standpoint. That’s because your ultimate goals will have a bearing on the best investment strategy you should choose, as someone wanting a steady passive income will have to approach things differently to someone looking to make considerable gains quickly. Choose the wrong route for your goals and you could end up disappointed with your returns.
5. Play the long game
Unless you adopt a particularly risky or aggressive strategy or have a lot of capital to invest, the chances of making enough money to retire on within a short period of time are pretty slim. Rather than being a ‘get rich quick’ scheme, property investment is best done in a steady, considered way, so that you don’t make any rash or unwise decisions. That’s not to say you can’t achieve a large return on your investment within 5-10 years, because you can. It’s just that if you push things too fast, your chances of overstretching and ultimately failing, increase.
6. Research the area you’re buying in
It always pays to look into the area you’re purchasing in and it’s relatively easy to do. Usually, you can find some of the statistics you need to know in local property magazines in terms of past sales, population growth etc and this will give you some idea of how the area is fairing and whether investing there is a good idea. It’s your capital you’re risking, so leaving things like this to chance is not a good idea.
7. Talk to the professionals
When investing in property, it’s a great idea to surround yourself with trusted professionals that can advise you when you need them. Having a local estate agent and mortgage broker that you speak to regularly can really pay dividends when the chips are down and you have to make a decision. They can help with structuring your borrowing, as well as notify you when new properties come onto the market. Don’t try and do it all yourself, as you really don’t have to.
8. Invest in properties that are suited to the market
If you want to make a profit investing in bricks and mortar, you really need to be investing in properties that are suited to the market. By that, we mean properties that sell quickly or are let out easily. For instance, in the centre of London, prices are high, so smaller, less expensive properties will be in demand, whereas in the countryside, larger, family properties are what many seek. Your friendly neighbourhood estate agent should be able to give you a steer on what sells well in the area you’re looking at.
9. Brush up on your cash flow skills
Being a successful property investor often involves a lot of payments coming and expenses going out, so it’s imperative that you control your cash flow well. You’ll have to make sure your regular monthly payments are made, as well as less regular incidentals that need paying quarterly and annually. Managing your finances to include emergency funds in case of unforeseen maintenance is also a wise move.
10. Stick to one strategy of investment
Those who have gained success in property investment tend to be people who have chosen one particular strategy and stuck to it. Diversifying your efforts can make things unnecessarily complicated, which is the last thing you need when you’re just setting out on your investment journey. Sticking to one strategy also allows you to become an expert at it, increasing your chances of success greatly.
And There You Have it!
And that’s it – 10 tips for first-time property investors everywhere. Do you your homework, make a plan, stay sensible and reach out to professionals when needed and you give yourself a great chance of making a life-changing amount of profit. Fail to do so and you could end up with a property that you can’t sell a situation you can’t get out of without losing a lot of money.