Property is a sound investment and you won’t turn back once you reap the rewards from your first one but it’s good to arm yourself with knowledge before you take the plunge.
To help you become clued up and get your investment off the ground, we’ve provided some valuable tip tops:
Find the Right Location
It’s important to find a property to invest in that ticks many boxes. Firstly, the profit potential of a property has to be worth the investment, whether you’re buying an old unloved building to convert and sell to make or profit, or purchasing a property with a view to rent out and earn a monthly income; it has to have an attractive margin.
An understanding of the area is important as you’ll need to know about the town or city and its transport links, development plans and any other factors that would make it a desired place to live.
Another crucial factor to making it a successful project is the property should be located somewhere nearby as you’ll be spending a lot of time on site so if you’re not a close drive or train journey away, the progression of the development could prove tricky.
Reduce Any Debts
It might seem like an obvious one but clearing, or reducing any other debts you might have accumulated over time will give you the best possible chance of succeeding without any additional financial burdens to think about, particularly as you will need a contingency.
Calculate Your Margins
It’s important to remember you’re buying a property for investment purposes and to make money so do you research when looking at the type of property you are purchasing. You’ll want something that will generate you the most amount of income. Calculate the rental yield by multiplying the monthly rental return by 12 and dividing by your investment x 100.
Monthly rental return = £700
Investment = £160,000
£700 x 12 = £8,400
£8,400 / £160,000 = 0.052
0.052 x 100 = 5.2% yield
The higher the yield percentage, the better the investment so bear this in mind when comparing properties.
Understand What Skills You Bring to the Table
You may be tempted to roll your sleeves up and jump right in with your development but it’s important to think about what skills you have and areas you may be lacking – we can’t do everything after all.
Establish what support you will need at the very start of your planning process and consider how hands-on you want to be. You may want to seek some additional guidance from experienced developers to ensure you minimise any costly mistakes.
To find out how Thomas Gideon could help bring experience to your first property investment and make it a successful one, contact us today.