We have been investing in property for 2 and a half years now and have a substantial property portfolio.
We have learnt a lot along the way, and we wanted to share this simple list with you which we hope will help you ask yourself the right questions when starting your property investment journey.
It can be tricky to know where to start and how to take the right first steps; we hope that this guide provides some food for thought.
AREA
Before you get started on viewings and placing offers, you must be certain on your chosen property investment area.
A good mix of homeowners and private renting tenants will ensure you are able to proceed with a variety of investment strategies in the area.
It is important to understand why people live in your chosen investment area: will there continue to be demand in years to come? Are people moving out of the area? Are rent prices increasing or decreasing in the area?
There is a broad range of factors that you must consider and analyse before you buy a property.
STRATEGY
Are you looking to make large sums of cash, or wanting to creating monthly cash-flow?
There are so many different property investments strategies; you must be clear from the outset about what you are looking to achieve financially, and this will help guide your investment decisions.
For more detail about the different property investment strategies, click here
YIELD & CAPITAL GROWTH
You need to decide whether you are buying for capital growth or not; this will determine your strategy as well as your area. You may also have a certain yield percentage that you want to be achieving with your investment properties.
Most single-let properties work best with a minimum of 7% + gross rental yield and multi-lets are often upwards of 12%.
In order to understand the capacity of capital growth in the area, you will have to review local council plans, development in the area, popular growth, regeneration plans and a number of other indicators.
Along with capital growth, if you want to know how to become a successful property investor, you’ll need to focus on trends like rental demand.
The number of people in the UK living in rental accommodation is higher than ever, with major increases over the last few years. Due to a lack of social housing and the difficulties faced by people wanting to buy their first home, there are a record number of people looking for rental accommodation, leaving more opportunity for buy to let investors.
You may often find that you have a variety of different investment areas to achieve high yields and capital growth, as they do not always exist in the same place.
EXIT STRATEGY
This is something you must consider before purchasing any investment property.
We always aim to have at least 2 exit strategies on each of our houses, this means you will not get caught out if circumstances change. Can you sell the property if you can no longer rent the house? Can you rent the house and still be making money if you are unable to sell?
There are many things to consider before making your first property purchase.