Investing in property can be a gateway to financial independence.
This article isn’t focused on any one particular property investment strategy. These 5 essential tips will help all property investors.
1. Local Knowledge
Hotspots will have improving fundementals like new amenities, transport links or other large developments that will increase local employment and housing demands.
Get serious about finding the “up and coming areas” in Scotland’s cities, towns and regions. Even in a struggling economy, you will do well by finding the right locations to invest in.
Avoid the “bad streets”! It’s strange how a bad street can sit right next to a good street.
2. Maximise Rental Revenue
Make the most of the available space. It’s common for property investors to buy a 1 bedroom and turn it into a 2 bedroom, or a 2 bedroom into a 3 bedroom and so on.
Look out for;
- Dining kitchens that can be repurposed as an open plan lounge.
- Box-rooms or big cupboards that can be combined to become an internal kitchen.
There are quite a few tricks and things to look for, including loft extensions and even building an extra house……if the garden is really big!
Your goal is to deliver the most rental income possible from your investment property, and usually that means adding extra bedrooms.
3. Build a Great Team
You need a team! They’ll give you great advice and are the vital cogs in a well oiled machine.
Here is a list of team members;
- Finance/Mortgage Broker
- Accountant
- Letting Agent
- Solicitor
Building your team should be one of the first things you do.
Borrowing makes your cash work harder for you and finance/mortgage brokers are great for testing your business plan.
The accountant will help with the structure of your property business, and find property tax solutions.
The letting agent is a great source full of vital local knowledge; like hot areas and rental yield info.
Lastly the solicitor.This cog is needed to make offers and deal with the legal conveyancing.
4. Have a Plan
Before you get too far down the road it is important to know what you want from your endeavours.
What do you want property to do for you?
It’s essential to define the clear goals.
For example, do you need a high yield to pay for your current lifestyle or capital growth for wealth in later years?
There are many ways to invest in property and, depending on your level of activity, you could have multiple strategies.
I can’t stress enough that everyone’s situation is different.
Do the numbers!
You must be very clear on “the numbers” and continually stress test your projections to ensure they give you a positive return for multiple market conditions.
Don’t get carried away. Rely on your calculations when making decisions.
5. Cash is King
The saying “every pound is a prisoner” might be too strong but it’s a good point to start from.
Make your property an asset, not a liability, by being very careful with cash-flow. The idea is for cash to flow inwards, not outwards.
One of the biggest mistakes some property investors make is spending way too much of their own cash.
Here are 2 ways this can happen;
- Paying too much – Paying way above the actual value of a property means you have to put more money in. A bad strategy.
- Refurb overspend – When work is needed, it’s important not to cut corners, especially in safety, but equally you must keep a tight budget.
Further to this, be very conscious of voids. It’s normal at the beginning (if buying a vacant property) but be aware that empty property is a liability, not an asset.
Now go do it!
Making property work means keeping a close eye on the £££. It’s not easy or a glamorous but property investment can lead to wealth.
Personally, I’ve found property to be fun and rewarding in unexpected ways!
I hope what I’ve written is helpful.
Please do get in touch if you would like more advice or just a chin wag about property investment.
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Written by Chris Wood, MD & Founder of Portolio
Get in touch on 07812 164 842 or email to [email protected]
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