"The No 1 Fatal Mistake 98% Of All New Property Investors Make ... And How To Avoid Making It Yourself"
Property Investment: The Importance Of An Investment Strategy
The No 1 Incredibly Important Thing You
Must know Before You Start … Or Your Financial Failure Is As Good
As Guaranteed
We all
want to make more money, which is understandable.
But what I've noticed, when asked "Why do you want to invest in property", most new investors typically say, "I want to make money and property seems like a good idea". But on further questioning, it becomes clear they haven't really considered how they'll make money from investing in property.
In my opinion, the No 1 Mistake that property investors make ... in fact it's even the very thing that stops them investing in the first place ... is: Not Having An Investment Strategy or Plan.
Serious and successful property investors never
enter into any transaction without a well-thought out plan or strategy.
Buying properties
for the sake of it, just because it seems a good idea, or an easy way to make money, is likely to give you some nasty surprises.
Before you consider investing in property, at Fast-Track we recommend that you first of all develop a simple
strategy or plan based on your answers to the following questions:
Why Do You Want To Invest In Property?
The appalling state of the UK pensions, with poor stock market performance, high management fees, changing goal-posts and a general feeling of lack of control over their financial future, is typically what causes people to turn to investment property.
Property can be a good means of providing for your retirement or long-term future. But to avoid disappointment and frustration, it's crucial that you understand how property investment works and what it entails.
Property investment is a commitment in terms of time and money. If you have a mortgage on the property, you have a responsibility to pay it, even if the property is empty. And when you become a landlord, you have a responsibility to your tenant, which is governed by law. And there's not much room for error there.
As you see, it's not something to be taken lightly. So, give some honest answers to the questions below and you'll have taken a massive step forward towards understanding what it means to become a successful property investor.
When Do You Expect To See the Benefits Of Success?
You can make money from property in the short term. No doubt about that. But to do it consistently, invariably requires a full-time effort as a developer or property trader ... and plenty of cash. And in a market where values are uncertain, it becomes even more difficult for the part-timer.
Successful property investors understand that investing in property is for long-term benefit. The strategy is to use your available capital to buy property and collect rental income to cover the costs, so you can hold on to the property for the long term profit from the increase in value.
Some investors want the rental income to also give them a personal income. If that's you, you're opportunities lie in the cheaper properties such as older 1-2-bed flats and the traditional 2-bed terraces. You'll likely get a good yield, but because the properties are cheaper, you'll have less profit from increase in value.
Another option is Houses of Multiple Occupation (or HMO's). For example, you invest in a 4 bed house and rent rooms to individuals. This can give good rental income, but requires more management and often more maintenance.
If you're fortunate enough not to need any extra income to live on, you have the freedom to buy higher value properties with a lower yield ... and benefit from larger profits on the capital growth. You should still make sure the rental income covers all the costs though.
How Much Capital Do You Have To Invest?
Of course all of the above is dependent on how much cash you have to invest.
Today's buy to let mortgage market is not as easy as it used to be. Most lenders now will only lend 75% of the purchase price of the property ... and expect any discounts or price reductions to be disclosed.
The downside of course is that you need more cash to invest, but the upside is ... it stops you from over-extending yourself and investing in properties that you cannot sustain. To benefit from value increases, you've got to be able to keep paying the mortgage and covering the property expenses.
Realistically, you will need around £25,000 to buy a property. That's to cover your deposit and purchase costs plus give you some extra for maintenance and any times when the property may be empty.
How Much Time Can You Give To Property Investment?
Another important factor in deciding upon your investment strategy is how much time you want to give it.
First there's the time in finding and purchasing the property. Then there's the actual ongoing management of it
Our clients tend to be employed and self-employed people, for whom investing in property is a part-time addition to their full-time job. So they don't have a great deal of time to spend on it.
When you buy through an property investment company, such as Fast-Track Property, the job of finding the property is significantly reduced. We do all the leg work on that ... and as much as we can do legally to help you through the purchase process.
As for the ongoing management you can do as much or as little as you want.
You could opt to do it all yourself - ie finding and screening tenants, checking references and doing credit searches, collecting rent and handing maintenance issues.
If this appeals, you need plenty of time and be willing to be on call for any issues. Plus, you'll be better off investing in properties close to home.
Most investors use letting agents to manage the properties. Either a full management service, where the agents do the lot. Or you may have them just find tenants and you take care of the rest. If you use an agent, you need to factor the cost into your monthly budget, and weigh it up against the value of your own time.
A big advantage of using letting agents is you can be much more flexible about location, so you don't need to miss out on a good deal because it's not local to you. If you're not managing it, it doesn't need to be nearby.
The Fast-Track Model Of Property Investment Success
Here’s what
we believe works (based on results) …
- Be sure you want the commitment of investment property
- Buy as many properties as you can comfortably afford
- Always
buy below market value property
- Use leverage by borrowing as much as makes the investment viable
- Use letting agents so you can have a mixed portfolio in
different locations throughout the UK and abroad to optimise rental
returns and capital growth
- Aim for the rent to cover
the mortgage and all other costs such as letting agents, insurance, service charge, maintenance etc. Plus have 3-4 months rental cover for each property to
cover voids
- Hold the properties for
the long term
- Release equity only after
5 years – preferably 10 years
OR Call us today on 0845 095 6900.
BMV & Buy To Let Property Investment London, UK, International
