5 Tips for Beginner Investors
Functioning as the best performing asset class for the past two decades, many individuals are turning to property as their main source of income, as the property market can be extremely profitable and deliver huge returns. The financial prospects of investing in the buy-to-let game are promising, as the UK property market is looking bright and prosperous.
However, opting to become a property investor is not a decision to be made lightly- and as a first-time investor you should be aware of decisions that could be the difference between achieving maximum returns, or alternatively, losing money or averaging out financially. To ensure you take all the right steps before turning your hand at being a property investor, we buy any house have come up with the top 5 beginner tips to keep you on the right track.
Tip #1- Objective is Key:
Before the excitement of becoming an investor takes over, have a moment to consider the reasons for this business venture. Ask yourself why and what you are doing this for – whether it’s capital growth, rental income or both! Think about how entering the property market as an investor could benefit you in the long term, in addition to considering what type of property is right for you. Renovated properties, as opposed to purpose built or student properties all serve different purposes, so evaluating which property type works best for you will help future goals be achieved.
Tip #2- Funding and Finance:
Next is to consider how you are going to fund and finance your properties. Perhaps owning a property for yourself is a good place to start, as then you can gain an idea of not only how to get on the property ladder, but it is an opportunity to become familiar with the financial requirements and the legalities of owning a property. In terms of finding the funds to own a property to let, building societies and banks will offer you a buy-to-let finance, however you may want to consider a private loan from family or friends – or even a sleeping partner.
Tip #3- Find a Team:
As much as you may think that property investing is a “solo career”, gaining all the knowledge you can is essential. Expertise from a good solicitor, an accountant, a mortgage broker and an estate agent are imperative. They can provide specialist advice in their field and help your progress in becoming a property investor. Finding a group of like-minded individuals can encourage you and provide support when things become difficult.
Tip #4- Risk Assessment:
It is crucial to eliminate unnecessary risks before you invest in property. Taking on a property blindly can cause irreversible financial damage later down the line, so it’s important that you take the right steps to prevent this from happening. During prior research, consider these questions: is there a strong tenant demand in this area? Are there similar properties selling in this locality? If so, what rent do these properties achieve? Will the proposed rent cost cover my finances such as mortgage payments, repair costs or management fees? Other things to consider are the potential of house prices falling, finances to secure both landlord and tenant and void periods. Ensure that the property fits your strategy in order to see the most effective results as a property investor.
Tip #5- Target Tenant:
In addition to considering the location and style of property, it’s important to consider who you have in mind when it comes to letting your properties. For example, buying a property in a heavily dominated student area will appeal less to families – whereas buying a property in an area of post-grads will be more successful. It can be difficult to narrow it down, as sometimes the ‘right’ tenant you have in mind may want something completely different – so relating back to tip number 3, it’s essential to have the right team of people around you to guide and advise you on issues like this.
By following these tips, you will give yourself the best start to becoming a successful investor and building a strong portfolio.
This guest post was provided by WeBuyAnyHouse. The opinions expressed by the guest writer above and those providing comments are theirs alone, and do not necessarily reflect the opinions of SevenCapital or any employee thereof. SevenCapital is not responsible for the accuracy of any of the information supplied by the guest writer.