6 Tips For New Property Investors
As the world economy remains unpredictable, many are looking to real estate to invest their money in. Some buy, renovate and sell houses at a profit, others add it to their property portfolio and rent out to private tenants.
If you’re thinking of moving into the business of real estate investment, there are some things that you need to keep in mind.
Do your research
Property investment hinges on good knowledge and research. When you are looking for property to flip, or for rental investing, then knowing the local areas and markets is vital.
When considering a purchase, look at the property prices in the area for similar properties. If you are renting out your property, what kind of monthly rent can you charge? What are the local school, shops, and transport links like?
Check with the planning office to see if there are any developments planned that might make the area more (or less) attractive to potential buyers. ]
Consider what work needs to be done to the property. Costly renovations will eat into any profits but may be necessary in order to sell the property on.
Consult with the professionals
Even seasoned property investors rely on professional advice to make decisions. When deciding on your property investments, it’s always advisable to get the advice of a real estate professional who knows the area in depth.
Set your budgets…and stick to them
Margins on property investment, especially if you’re planning to flip the property, can be very tight. A few thousand dollars on the asking price or adding unnecessary upgrades and renovations, can all add up. These may seem like small, inconsequential amounts, but they do add up. This will reduce the amount of money you make when selling the property on, or extend the period you need to rent it out before recouping your costs.
Set realistic budgets at the outset, with some contingency for unexpected expenses, and stick to them.
Have a good team behind you
Successful property investment is a team effort. Surrounding yourself with a good team of reliable, knowledgeable people is key to success. Depending on the size of your property portfolio, you may not need employees of your own, but you absolutely need a good accountant, financial adviser, and real estate agent.
Together you can make your property investment business run as efficient;y and profitably as possible.
Develop good relationships with contractors
Properties often need a lot of work done to them to bring them up to a good standard. This can be anything from a clean or cosmetic makeover to a full renovation. To do this, you’ll be relying on contractors to do the work.
By developing ongoing relationships with contractors, you can build a level of trust. Once you’ve found a contractor that is easy to work with, completes the work to your standards, and stays within budgets, it can make your life a lot easier.
There are advantages for the contractor too, know that they have regular work coming in, from someone who is trustworthy and easy to work with.
Keep an open mind
The property investment world is exciting, but many often stick types of property. While it is good to build up knowledge in a certain area, for example, condos, diversifying is also an option.
Diversifying into other areas such as rental investment, commercial property, or housebuilding can add a new dimension to your portfolio and spread any associated risks should certain parts of the sector experience a downturn. That way, should one area take a hit, all of your investments aren’t tied up in it. The rest of your portfolio continues to provide income while you’re waiting for the market to pick up again.
While the property market is considered less of a risk that other types of investment, this kind of risk spreading profile is common in most types of financial investing.
Property investment is a great way to secure your financial future. As with all areas of business, you need to develop a level of professionalism in your approach.
Being rigorous in your approach is the way to ensure that you are making decisions based on the best available data and professional advice.
Self-discipline and surrounding yourself with a good team is key to long term success in this area. By following these pieces of advice, you’re placing yourself in the very best position to succeed in your property investing career.