Do you ever watch property investment programs? Such as Property Ladder and Home Under the hammer and think I would love to be a property investor?
You start to gather information on the internet, from magazines and newspapers, then your eyes start to glaze over as there is so much to process and It becomes quite daunting when you don’t know where to start. So, here is the good news getting into property investment isn’t that hard, and less confusing than you think, but there is a process that you will need to follow which will enable you to become a successful investor.
If you are new to property investment following these eight simple stages will allow you to create a property portfolio that is profitable and delivers long term growth for years to come!
Stage 1 Educate Yourself
Getting yourself educated is perhaps the best investment you will ever make, as buying just any type of property could result in a failed property investment.
Most newbie landlords tend not to get pass their first or second property investment simple because they haven’t adhered to a through strategic plan.
There are a lot of properties on the market that in my opinion don’t pass the muster therefore not delivering on the Return on Investment (ROI)
The key to this first stage is to research what strategies in property investment have worked for other successful investors, that have walked this path before you. Don’t be shy, here ask them what worked for them and follow their steps to success.
Any great strategic investor understand they must build a substantial property portfolio, before they can lower the Loan to Value ratios, therefore allowing them to live off their property’s net profits, which is would be generating a passive income.
This simply means at the start of your investment career; the idea is to pursue capital growth rather than cashflow in the early stages.
Stage 2. Do your research
On average around 70% of your property performances will be based around where the properties are located. The key here is to research these core principles;
Find a location where the economic growth is strong- leading to…
Job prospects are high aligned with growth leading to ….
Populations growth leading to ….
You’ll find this will occur particularly in major cities.
Then look for towns where wages have grown faster than the national average – these are often gentrifying towns or established “money belt” locations.
Stage 3: Set a realistic budget
Purchasing your first investment property and getting it ready for the rental market will involve some of your time and a small financial commitment; the golden rule here is not to underestimate how much resources are going to be needed at this stage.
Set up a saving account called “Rainy Day Pod” use this to put aside a small amount of cash each month- as these days do happen to come around when you least expect it, but at least you will be prepared for it.
Stage 4: Purchase the correct property
Although the location is the critical part played in your investment property’s performance – being the owner of the right property in that location is fundamental.
The objective here is to purchase a property with potential;
> Great infrastructure
> Close to schools, Colleges and University’s
> Public Transportation
> Occupier appeal
> A level of scarcity
> Ability to add value
> Capital growth
Its important to note that your property should be suitable for your target market of that area, which you would have previously identified in your earlier research stage.
Stage 5: Think before you buy
It is important allow yourself the time to consider all the facts that goes with investing in property.
This is a big decision and should not be taken lightly, unless you are a seasoned property investor and understand all the stages of investing in property.
The real game here is to exercise patience’s as the wrong decisions could be very costly.
I always take my time to find the right property, however when I do find it, I’m definitely in a hurry to buy it, once all my due diligence has been carefully considered.
As Warren Buffet said: “Wealth is the transfer of money from the impatient to the patient.”
Stage 6: Delegating work to specialist
As a property investor, it will become impractical to take on all your investment needs. Although you may feel it unnecessary at this stage to hire a;
- Property manager
It would be more cost effective to invest in having a team-who you can rely on to get the job done with little effort, less time and saving on cost, than you attempting to do them yourself which could lead to costly mistakes.
Having a reliable team will allow you to spend your time more productively.
Stage 7: Get insurance
Getting landlords insurance should be as important as purchasing the property. As Most lenders request to see proof that the property is insured before releasing mortgage funds, as they want to be assured that their 75% investment is covered should anything happen to the asset.
“Better to be safe than Sorry” is words that should be heeded when it comes to insuring your property, it’s a safety net in the event something significantly happens.
Shop around for a good policy that will cover you in the event of malicious damage, lost of rental income, or damage caused by a tenant and is untenable for a short period.
Step 8: Never Buy an Unseen Property- EVER
In a situation where it’s impossible for you to see the property, hire an independent specialist buying services, to be your “eyes” and “ears”, giving you the security that you need, allowing you to therefore make an informed decision without losing money.
So, by working through this eight-stage process, you will hopefully side-step costly and time-consuming mistakes, and put yourself in a positive and stress-free Position experiencing profitable investments as a landlord.
Where a newbie investor trips up is by not getting themselves educated thus lending to costly mistakes
At the start of this article I began telling you that getting into property investment isn’t that hard, but there is a process to become