Investing in property is one of the best ways to create wealth for yourself and your dependents. However, it requires more than just buying a property and placing an advert or two to attract tenants.
To make a success of property investment, you need to make the best possible use of the tools employed by professional investors.
Fundamentals
When choosing which area to invest in, you need to make sure there is strong demand for rental properties from tenants – not just now but in the future. To do this, you need to look at the fundamentals of each area.
Look for the following:
- Shopping amenities.
- Transport links – are there good road networks, buses and train links?
- Schools – are they of a good standard?
- Investment – any future plans by municipal or private investors?
- Employment – who is likely to employ your tenants?
Be sure to check that all – or most – fundamentals are in place. You may be able to find a bargain in a cheaper area, but it will be worthless if it stands empty.
Effort
One of the golden rules of investing in property is to monitor your costs and ensure you get more out of your investment than you put in.
Property costs are calculated in more than just finances, though. Each property you own will take some of your time to source, purchase, rent out and manage – and a lot of your energy. Some will have higher costs than others.
It’s essential to make sure the financial return on each property is worth the time and energy you will be spending. Remember that although you can usually recover your money, you can never recoup the time or energy spent on a project.
Teamwork
Property investment requires many different skills to do with financing, sourcing, strategy, conveyancing and DIY. It’s unlikely that you are an expert in all these fields.
Building a team will enable you to focus on what you're good at while other people in your team take care of the rest. Your team should be able to save you time and money and help you succeed.
Depending on your strategy, you could have some of the following in your team:
- Mortgage originator.
- Conveyancer.
- Rental agent.
- Handyman.
- Mentor.
If possible, ask for referrals to be reasonably sure that you’re picking the right people.
Agents
When you’re considering a potential buy-to-let purchase, call up a local letting agent to find out what rent the property is likely to achieve and how quickly you can expect to find a tenant.
On the Private Property site, check for properties to let near your target property and see which agent seems to have the biggest local presence. Phone and tell them you’re thinking of buying a property in the area and want an estimate on what rent you could charge. Provide details of the location, how many bedrooms and bathrooms the property has and any other information that could influence the rental amount, such as parking facilities.
The agent should be able to tell you what similar properties on their books are rented out for and how quickly they tend to be snapped up.
A good agent should also be able to tell you what factors separate the properties that rent quickly from the ones that remain vacant. It could be a question of rentals that are too high, but there may be other factors that you should be on the lookout for.
This exercise is also a good way of finding the right agent to manage your investment property when you do find the right one.
Keep up to date
Last but not least, successful property investors make a point of keeping up to date on what is happening in the property market in general - and the rental market in particular.
Signing up to a property newsletter – such as the Private Property newsletter - is an effective way of keeping abreast of current property news – including trends, legislation and new listings.
Writer: Sarah-Jane Meyer
