Even the most successful of property entrepreneurs have to start somewhere, but there can be so much to focus on at the beginning that you don’t know where to begin. So, to help you along, we’ve put this article together with 7 strategies for you to get you creating your own portfolio of property from a standing start.
So, without further ado, let’s get stuck in.
Strategy 1 - It’s a Bonafide Business
The first mistake that many budding property tycoons make is not treating the enterprise as a business. Whilst it might seem like fun (and it often is), your ultimate aim is to generate profit, which means that every action you take should be made with the same care and attention as if you were ‘at work’, working for a company that pays your wages.
This means putting 100% into things like market research, housing trends and creating professional networks to support you in your endeavours. What absolutely should NOT happen is that you make investments based on emotional factors or because you like the look of the house in question. All of your decisions need to be shrewd, based on the facts and not influenced by emotion attachments.
Strategy 2 - Know Your Limits
What you need to establish early on is exactly how much you’re going to need to invest of your own money and have a realistic view of what constitutes ‘overstretching’ yourself. In a modern housing market that requires significant deposits (around 25%) and a host of other legal costs, if you don’t take everything into consideration at the outset, you could be engaging in a very costly mistake.
If your maths don’t add up, the chances are, a buy to let mortgage lender is not going to offer you a mortgage anyway, as the rules they work to are much more tightly regulated than they were before 2009. Overstretching and reaching for the stars is perhaps one of the most common mistakes that property investors make that results in things going awry.
Strategy 3 - One Property At a Time
Identifying a potential property, researching the area and all the things that are involved in a house purchase, need your absolute focus, which is why at the outset at least, you should concentrate on one property at a time. Even if money was no object, it would still be foolish to move on multiple properties at the same time.
Take time, employ the appropriate amount of due diligence, work with experienced property professionals and you’re likely to enjoy a much less stressful and much more successful time of things.
Strategy 4 - Buy Low Sell High
Now, this might seem pretty obvious and of course you want to sell higher than what you buy property for, but what we’re primarily talking about here is to be aware of market conditions at any given time. Whilst there are often homes sold for less than their current market value, you have to ask yourself where the market is heading. If you’re in the midst of a housing boom, then don’t put all of your metaphorical eggs in one basket in case there’s a sudden dip in the future.
Like it or not, house prices do fluctuate, so protect yourself.
Strategy 5 - Be Good to Your Tenants
If your tenants are happy and well looked after, then they are are much more likely to stay for a much longer period of time. Empty properties offer you nothing, in fact they present you with a problem, so it’s important that you’re a good, fair landlord who doesn’t drive people away from renting. The only loser if you do, is you.
A good way to ensure that your tenants are looked after is to employ a property management agency, but be careful who you work with and that they have an ethos that matches your own.
Strategy 6 - Save, save save!
Whilst it’s great to make hay while the sun shines, the savvy property investor is someone who has half an eye on their overall financial status. A good rule of thumb is to set aside 20% of all profits, as you can soon see this figure rise considerably.
Not only does this offer you what can often be vital breathing space, but it also boosts your buying power and the level of property you are looking at improves along with your financial position. What can also help is if you were able to boost your earnings by gaining extra qualifications or a promotion.
Strategy 7 - Enhance the Value of Your Portfolio
When talking about return on investment, there is nothing quite as instant and as easy to achieve as freshening up and making your properties a) more attractive to tenants and b) more appealing to buyers. It’s amazing the difference that a fresh coat of paint and a few choice pieces of modern furniture can make to a house.
£500 worth of paint, brushes and furnishing, can add thousands to the overall value of a property or allow you to add a good percentage onto the rent you’re asking. What also needs to be said is that if you look for “fixer uppers” that maybe don’t need renovation, rather a bit of TLC, then this can represent a great opportunity to buy low and sell much higher - all for a little elbow grease.
We all have to start somewhere and there are many things to factor in to making your property ventures a success, but if you follow these basic principles, you’re going to find it that little bit easier to make your way and turn a profit.
We hope this article has helped and we wish you the best of luck.