Given the state of flux in the investment property market now, there is more uncertainty and potential risk in property investment at this moment in time.
Investing in property needs to be considered more carefully as an investment type, but there are still gains to be made with by making the right decisions.
These simple tips will help you navigate the uncertainty and create a profitable business investment, regardless of the current market conditions.
Know the market – nationally and regionally
If you don’t understand the market in its current state you won’t be able to make the best decisions to succeed in it (of course you could just hire the services of experts who do know, but it is useful to have that knowledge yourself).
Given the current market trends and fluctuations, the wrong decision could mean committing capital to loss-leading property investment. Knowing the trends on a national scale and your local marketplace will help you ascertain whether an investment in property is the right move at that time.
Research all types of property investment such as buy-to-let and commercial properties to ensure you are investing in the best place for your money.
Invest in up and coming areas
Few things increase a properties value than sitting in an area that is enjoying a surge in popularity, investment and growth. Even in the direst of market situations, some areas go against the grain and rise in value.
With some research, you can determine where these hot spots are and are likely to be. Is a place about to have huge investment in local infrastructure, a new attraction or improved transport links? Is there a trend for “gentrification” of the area? All these factors can contribute to growing prices.
Determining where these areas are could not only protect your investment but pay dividends in the future.
Get your budget right
Everything will fall apart very quickly if you don’t have a firm grasp of your finances and your financial reality before investing in property. Take time to sketch out what you can afford (including maintenance, repairs, mortgage, development and renovation costs, plus anything else that is required), and also predictions on what returns you will be able to yield from the property.
With what you can borrow, the required deposits and running costs, can you make the figures work with your investment?
Spread the risk
Top property investors spread their risk over a diverse portfolio of properties to protect their capital. Develop a good spread of different property types to give you the best chance of succeeding no matter what the market conditions are.
Get a good network of trusted tradesmen
A network of tradesmen that you can trust and are cost-effective is worth its weight in gold to property investors. Getting a quality job, on budget and within a manageable time frame is the goal.
Inevitably the more renovation and repair jobs you do, the quicker and smoother the jobs will run, as you develop your network. Speak to other people in the property trade to see who they recommend.
Always pay good tradespeople on time. They will appreciate that and with a good working relationship, you will get better work and a potentially better cost.
Don’t just accept the list price
Property investors have a lot of negotiating power and you should use this to your advantage. If you are not selling another property to fund the deal, or are not part of a chain you have a strong advantage to make lower offers and not get hit with paying more than you need to. Push the fact that you can complete quickly and with limited fuss as many sellers are looking for speedy and smooth transactions.
Shop around for funding
Take time to consider your finance options. Don’t just sign up for the first deal that looks decent and don’t simply go through the bank or lender you always use. Research the market, and, if possible, use a qualified, independent financial broker who can guide you to the best deals.
Of course, using independent, third-party advice does not mean you shouldn’t do your own research, you should to make sure you know all the deals available, and you might also uncover something a broker has missed (although it is unlikely.)
That concludes our top tips for success when buying investment property, to survive market conditions, increase your property portfolio and increase your ROI.