There are a multitude of articles and tutorials about the do’s and don’ts of the property investment market. But where to start? In the sea of information, it is easy to feel lost, confused, and to end up drowning.
So, to help you get started, here are five of the key points you need to know about property investment.
1. A Plan
The first thing you need before you set off on any kind of journey or adventure is a map. Property investment is no different. Before you set off to launch a career as a property investor, you should have a plan.
What are your goals? What do you plan to achieve by becoming a property investor? Where do you see yourself and your career in a year?
Once you have figured what you want, find out how to get there. What are the steps that will lead you to success? If you look at success as your ultimate destination, what are the roads and paths that will lead you there?
2. Do the Research
In order to know how exactly you can achieve your goals, you need to familiarise yourself with the ins and outs of the trade. As an amateur and a budding investor, it is only natural that your knowledge and skills are limited. No one is a born an expert in property portfolio management. This, however, does not mean that you don’t have to do your homework.
Being a property investor isn’t just merely about buying a building – be it a house, a flat, or a shop. There are a number of things that require your consideration and attention before, during, and after your purchase.
If, for instance, you have found a property that interests you, you ought to start by conducting some basic research. Look into things such as criminal activity, vacancy rates, and the historical value of the neighbourhood. Other things you want to consider are whether there are schools, amenities, and good public transport links in the neighbourhood. These are also the factors tenants will look at before renting.
Before you sign any contract, take the time to talk to local residents, both tenants and homeowners. Find out about the history and the present state of the neighbourhood as that information will help you determine how your property is likely to perform in the future.
3. Don’t Forget About the Profit
The key thing to remember is that property investment is a business, not a hobby. And as a business, the main goal, your raison d’être if you will, should be a positive cash flow.
Admittedly it can be somewhat overwhelming for a first-time investor to understand and consider all of the costs involved in buying and maintaining a property. However, as Machiavelli once said, “there is no avoiding war”. In other words, sooner or later, you are going to have to sit down and fight your way through the numbers and data.
Familiarise yourself with the kinds of costs you can expect. Find out about things such as mortgage insurance, tenant damage, council tax, body corporate fees, and maintenance and water service costs.
While it is your (and only your) task to acquaint yourself with your financial responsibilities as a property investor, there are a number of services that can help you stay on top of everything, like property portfolio management software. Tools such as these are ideal to keep track of all your costs and help you manage your property effectively
4. Patience and Persistence
Most people often don’t make it past their first property investment. Demoralised and demotivated by the absence of immediate success and a large cash flow, they quickly give up.
But success and riches don’t come overnight, and with property investment it is no different. In order to be a successful property investor and reach your goals, it takes hard work, patience, and persistence.
And, even after all the trying and all the hard work, if you fall on your face, then don’t just give up. Get up again, brush the dust off, and just try again.
It will take time, strength of will, and dedication. But to paraphrase the old saying: “Patience and persistence are bitter, but their fruit is sweet.”
5. Business, Not Emotion
The final advice is the simplest and, in a way, also the most difficult piece to follow. As I mentioned already, property investment is a business, not a hobby.
Your decisions, however big or small, ought to be business decisions. They should be based on reason and logic, a result of careful consideration and analytical research.
This is neither the right place or time to be emotional or to let your heart dictate your actions. While it is good to be motivated by your passion, emotions and irrational thinking have no place here. This is a business, your business, so treat it as such.
About the Author:
Yaakov Smith is an entrepreneur who is passionate about providing creative solutions to everyday business issues. He is the owner and founding manager of Logican Solutions Ltd, which offers a range of industry specific services including claims management, debt management, and property portfolio management.