8 Essential Steps for That Curious Property Investor
This article was provided by Sapphire Gray, director of SavvyWomen.
Have you ever been in a situation where your curiosity and desires left you confused leaving you both mentally and emotionally overwhelmed?
This is the case for most upcoming entrepreneurs and property enthusiasts who get inspired by new business ventures in the property industry. The information they collate from the internet leaves them in a hurricane of confusion, as they try to decipher which information is best suited for them and what course of action to take in their property investment journey.
This is why it is so important to get a mentor or an industry professional to guide you as you take your first steps into property investment. The input of a professional property coach cuts down the sea of information, helping you to create the bridge in your learning, in turn shortening the property investment journey.
So, this article is inspired by you; that curious investor who needs a guiding hand to walk you through the essential steps to take whilst getting started in the property investment journey.
Firstly, here is the good news, getting into property investment is not that hard, and is 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.
Secondly, if you are new to property investment, following these eight simple stages will allow you to create a property portfolio that is not only profitable but delivers long term growth for years to come!
So, here you go!
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 investors tend not to get past their first or second property investment simply because they have not adhered to a thorough strategic plan.
There are a lot of properties on the market that in my opinion do not 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. Do not be shy here, ask them what worked for them and follow their steps to success.
Any great strategic investor understands the importance of early planning to build a substantial property portfolio, reducing the Loan to Value ratios, therefore allowing them to live off their property’s net profits, which 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 cash flow.
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
- Job prospects are high and aligned with growth
- Population growth
- Housing Demand
You will 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 a 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” and use this to put aside a small amount of cash each month in the event of an emergency. These days do 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 plays a critical part 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 Universities
- Public Transportation
- Occupier appeal
- A level of scarcity
- Ability to add value
- Capital growth
It is important to note that your property should be suitable for your target market in that area, which you would have previously identified in your earlier research stage.
Stage 5: Think Before You Buy
It is important to allow yourself the time to consider all the facts that go 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 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 am definitely in a hurry to buy it, once all my due diligence has been carefully considered.
As Warren Buffett said: “Wealth is the transfer of money from the impatient to the patient.”
Stage 6: Delegating Work to Specialists
As a property investor, it is impractical to take on all of the work your investment needs. Although you may feel it unnecessary at this stage to hire a; property manager, accountant or handyman, it’s more cost effective to invest in a ‘power team’.
If you can rely on these people to get the job done, you can save effort, time and cost, especially if you attempt to do things 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. 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” are words that should be heeded when it comes to insuring your property, it is 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, loss of rental income, or damage caused by a tenant and is untenable for a short period.
Step 8: Always ‘Get Eyes’ on Your Property
You should always try to visit your potential investment for yourself.
In a situation where it is impossible for you to see the property, hire an independent partner to be your “eyes” and “ears”, giving you the security and clarification that you need, allowing you to therefore make an informed decision without losing money.
By working through this eight-stage process, you will hopefully sidestep costly and time-consuming mistakes, putting yourself in a positive and stress-free position to experience profitable investments as a landlord or investor.
If you are, however, in need of that helping mentor that I talked earlier about, be sure to email me at email@example.com and together we can formulate a successful step by step action plan to get you smiling throughout your investment journey.
Moreover, for more information about Savvy Women Group, be sure to visit www.savvywomen.co.uk where you will learn more about Property Investment, Property Investment Courses, One on One Property Coaching and Property Budget Planning.
This guest post was provided by Sapphire Gray from SavvyWomen. 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.