5 Secrets to Successful Property Investment
The idea of being able to make millions through investing in real estate is one that is appealing to many, as evidenced by the buy-to-let boom in recent years.
It is estimated that there are over two million landlords in the UK, a figure that rose by seven per cent between 2013-14. With many millennials relegated to renting, for those already on the property ladder especially, there is a big opportunity to move into investment and start a portfolio. However, while the process may seem simple enough, there are a number of things that can “make or break” your investment efforts, such as…
Understand the commitments on your time
Property investment does require capital of course, but if you plan on letting your property rather than flipping it, you’ll need to be ready to commit to the good, the bad, and the ugly – not to mention the unpredictably expensive. There is a big difference between being a homeowner and being a landlord. This is probably one of the biggest shifts in mentality that you’ll have to make when purchasing a property to let versus one in which to live. Being a landlord is a lot of work; whether you are dealing with a property management company or a tenant directly, you’re still subject to receiving emergency calls about broken down boilers, or unexpected costs to fix storm damage. Before entering the buy-to-let world, you should be sure you’re ready to put in the work that’s necessary to make your investment a success.
Don’t go it alone
You can attend workshops, online seminars and read all the content available, but especially when you’re getting started, having the help of experienced professionals can save you a world of hassle. Invest in your education, but also invest in assistance from impartial experts wherever possible, and seek out advice from seasoned investors who can steer you clear of common errors.
Define your investment strategy
Do you want to fix and flip property to make a profit? Or is your plan to buy and let? How much income do you need to generate to cover mortgage payments and basic expenses, and what is the expected capital growth of the property? What is your exit strategy? Answering these and other questions will help you determine how best to reach your goals. You could be an ambitious investor looking to leave full-time work and quickly amass a portfolio to act as your primary means of income, or you could be a homeowner looking to generate additional money through renting out a property. Once you’ve mapped out your reasons for investing and your goals (financial and otherwise), your actual investment strategy can start to take shape.
Look for properties and places with potential
Properties in need of work can put some investors off, as they may be worried about the time and capital outlay it will require to get the unit up to spec. However, while a turnkey property can get tenants in the door sooner, there is not the same potential to generate profit as there is with a project. A well-finished property will not only return money in high rates of rent, but the value of the property itself will also rise, meaning you can make a tidy profit on the sale of it in addition to rental income. For this to work however, location is also important – even those most impressive of renovations will lie empty if it’s situated in an undesirable or ill-serviced part of town. The key is to research markets and act quickly when the right opportunity comes along.
Look beyond the beaten track for properties
The vast majority of property searches begin online, but this doesn’t necessarily mean this is how to find the best investment. The trick is to remember that you’re not looking for a great property – you’re looking for the best deal. This means the best way to maximise your profit while minimising your outgoings – so where to look? Property auctions are a great way to come across deals, as are independent boards that allow buyers to list directly without representation from an estate agent. You can also be proactive and advertise yourself as a keen investor – for example, you could post flyers through houses in your chosen area noting that you’re an investor interested in a local property. This could connect you with someone looking to sell, or it could plant the seed for those who hadn’t thought about selling who would be willing to have a conversation. It could also result in nothing – this time. But raising your profile among the local property community as someone who is interested in buying below value and quickly (as many investors are) could help you create a network of useful contacts.
FJP Investment is a team of investment specialists sourcing a wide range of investment opportunities both in the UK and overseas. Products include the recently launched property investment bond.