For my brother Daniel and I, property investing has been a rewarding and exciting journey. Not without tough times, but these have certainly been out weighed by the high points. Since we closed our retail business back in 2006 to focus on placing CXG on the map within the property sector a lot has changed, for us and within the market place. However, one thing that has not changed is the ten points I advise people to consider when starting out in building a property portfolio. These points, I believe are the key to achieving a balance between a happy bank account and a happy investor as by following some simple rituals at the beginning of the process you will minimise the headaches later on down the line and in turn, minimise the risk.
Top 10 Property Investment Tips:
1. Buy for cash flow.
When I started property investment I bought properties I knew would generate good cash flow. When the financial crisis hit my portfolio remained robust and once interest rates were dramatically cut my income increased substantially, therefore always look for price points enabling you to generate attractive returns.
2. Invest for the long term.
Do not be drawn into expensive courses telling you how to become a property millionaire overnight with just £1 in your back pocket. Financial freedom goals can be reached if you create a long term strategy of between five and ten years.
3. Be realistic about maintenance costs.
Do not underestimate the funds which will be required to maintain and improve your properties. Have an emergency fund for an example: boiler breakdowns. Have a refurbishment plan to enhance the value of your property and to generate increased rental income.
4. Negotiate a discount.
Hone your negotiating skills and walk away if your minimum price cannot be agreed. Other deals will always come along.
5. Research the location.
What is the capital growth potential in the area you have chosen to invest in? Paying market value in an area which, due to regeneration, is set to grow by 20% per annum is a better investment than negotiating a 10% discount in an area where growth has a 3 year static period.
6. Look for a property you can add value to.
You can often enhance the value of your property by simple refurbishment i.e. new bathroom, new kitchen, new carpets and neutral finish will create an immediate uplift in value if you have targeted the right property in the right area.
7. Remember, you are creating a business.
Many investors, unlike the tax man, do not understand as soon as an investment property is purchased a business is created. You should therefore treat the business with the respect and investment required to generate the income to reach your financial goals.
8. Have a passion for what you are doing.
Property investment can be challenging and you will face many hurdles. Having a passion for what you do will enable you to have the perseverance to overcome these challenges.
9. Put a value on your time – can you outsource to someone?
Many property investors cause themselves a lot of stress by believing they can become experts in all areas of property investment, they fail to value their time and inevitably cost themselves thousands of pounds by not having strong strategic alliances with the relevant experts in their field e.g. property sourcers, mortgage brokers, solicitors, and accountants.
10. The best and last tip.
I believe the best tip I can give you and therefore my last (not entirely tongue in cheek) is to partner with a company like CXG to assist you in building your personal high cash flowing property portfolio. I strongly believe we can assist you in finding the right investment opportunity for you and work together to reach your personal financial goals.