Buying your first property investment: 10 things to keep in mind
When you’re new to property investment, you want to make your first investment count to give yourself the best possible start. No matter how much experience you have, success is not 100% guaranteed. We have put together some simple steps to help you make sure you are on the right path. It can be used as a framework for making the right decisions.
1. Make a checklist and stick to it
Creating a step-by-step checklist for yourself will ensure you don’t miss out any crucial steps when buying a property. A simple list of activities including everything from filing paperwork to arranging surveys, mapping it out on a piece of paper means nothing is overlooked. This will give you peace-of-mind knowing you haven’t forgotten anything essential.
2. Keep your business head on
Remember that buying a home for you to live in personally is not the same as looking for a property to invest in, and you should approach the situation from a business perspective. When it comes to property investment, you need to take your emotions out of the situation to avoid overpaying and focus on the purpose of the investment – making money.
3. Research, research, research
Not to state the obvious but make sure you know the area you want to buy in inside out, and this will help you make smarter decisions. There are thousands of resources available to you both online and offline. Use these resources to your advantage, arm yourself with all the information available, and you will be giving yourself the best possible starting point.
4. Set clear goals
When starting out , it is a good idea to set some clear goals for yourself around what you are trying to achieve financially. Having a target wealth figure and timeframe will influence the property investment strategy you choose. If you choose the wrong investment strategy for your goals, you could end up disheartened by your returns.
5. Think about everything long term
Property investment should not be thought of as a ‘get rich quick’ scheme. It should be done in a careful and thought-out manner, taking the time to consider the best course of action at every stage of the process. That being said, it’s still very achievable to see substantial returns within five to ten years, bear in mind that rushing into things too quickly increases the possibility of failure due to overstretching yourself.
6. Make sure you know the area
As we’ve said before, there is a wealth of information available to you. Make sure you use this to your advantage and research the area before making any investments. Statistics on previous sale prices or the growth in the population should give you a good indication on whether investing in the area is a smart decision. It’s better to take the time to do your research than risk your capital by investing too quickly.
7. Include the relevant professionals
When starting out, it’s useful to identify professionals that can help you on your journey. Having trusted local estate agents and a mortgage broker can benefit you when you need to make difficult decisions. There is no point trying to do everything yourself when there are people whose job it is to help, make sure you utilise the experience of other professionals.
8. Make smart investments
To be profitable in your property investments, it’s important to buy properties that match the current market needs. Look out for properties in an area that are let quickly or on the market for short periods. This is when being in contact with your local estate agent is useful – they can guide you on what is happening in your area and let you know the best places to invest.
9. Cash Flow is King
Having an understanding of cash flow is vital to property investment as there will continuously be payments and expenses to track. There will be a mixture of monthly fees and one-off payments to be made, sometimes quarterly and sometimes annually, so ensuring there is enough money in your account to cover this is crucial. Additionally, you may want to have contingency cash in your account in case of emergencies or unexpected property maintenance.
10. Choose an investment strategy and stick to it
Sticking to one approach with your property investment will help you get the best returns. Over-complicating matters when you are first starting out can make your journey unnecessarily tricky. By having one strategy and sticking to it, you will become an expert over time and make you a successful property investor.
We hope our ten tips for first-time property investment have been helpful. By following this guide, you could stand to make a lot of money. If you ignore the advice, you might find yourself in a difficult situation with a bad investment that you can’t get out of. If you would like to hear more about the services we provide at Nichol Smith Investments, click the link on our homepage to book a call.
