Property investment lures many would-be entrepreneurs. Those that thrive are the ones who understand how to turn houses into profits.
Learn to Spot Trends
Knowing what’s happening in the property market at the time of closing a deal helps you retain control of finances. You have a current framework regarding prices, types of property, fashionable location. You also know lending rates, likely rental yields and roughly what other similar properties have sold for.
This is only half the picture, however. When you’re investing in property for reasons other than providing a roof for the immediate family, having a crystal ball helps. Given that most of us don’t, the next best thing is training yourself to recognise how world or local events can affect property prices.
For instance, the average man in the street won’t have given a moment’s thought to how recent sanctions against Russian oligarchs might affect the premium London property market. When a major buyer is taken out of the equation, both price and availability feel the effect.
Develop Expert Contacts
From financial advisors to professional buying agents, it pays to have experts in your corner. Since there are so many aspects to consider in property investment, it’s a rare individual who has all the needed skills.
Put your focus on the aspects you do best, whether that’s identifying likely properties for investment or rooting out the best mortgage deals. Consult with experts on the parts of the process you’re not so confident in.
Find Motivated Sellers
Sealing the deal is much easier when both parties are keen to complete. If want a swift closure on the deal, don’t waste your time chasing properties where the owners are in no rush to move. Equally, don’t feel you’re taking advantage of those who might be making a reluctant sale.
There’s a world of ethical difference between a fair market price for a quick sale and an inflated offer to tempt a heel-dragging seller.
So, where to find motivated sellers? Here are one or two ideas:
- Stay in touch with your experts or other property investors
- Inform everyone in your social and business circles that you’re buying
- Identify properties that have been on sale for a while
- Keep an eye on auction listings – register with auction houses to stay in the loop
Organise Your Finances
Extending your portfolio invariably means securing additional financing. Take care of this as early as possible. Knowing exactly how much you have to play with puts you in a more solid position when you find the ideal property. You’ll be able to negotiate with more authority which will hopefully secure a better price, plus you’ll know exactly what your budget is for any repairs or renovations you plan on doing before renting out or reselling.
If you take note of point two and develop a relationship with your bank or other lender, you can make sure you always know exactly what your financial position is. Having to hand figures that show how much you can raise at any given moment can mean the difference between grasping or losing an opportunity should one arise unexpectedly.
Develop and Eye For a Bargain
You can’t know a bargain if you don’t know the market. Keep up to date with current affairs, local town planning and changes in housing trends. Understand your market, what drives it, what affects it, what it’s vulnerabilities are, and you can gain a kind of sixth sense for a good investment when you spot one.
Being able to make good decisions, based on solid market knowledge, will give you the confidence to dive in where others might hesitate.
In a nutshell, to build a successful property portfolio you should take expert advice, get your finances in order, understand local trends and world events, and recognise likely properties when you see them.