Investing in property can set you up for a sound future, but it’s not an easy journey. Whether you are leveraging the equity in your home for a passive income, or planning an entire development, property investment should be treated like any business; with careful planning and execution. At The Mortgage Supply Company, we have successfully helped hundreds of people gain the finance needed to climb the property ladder. When they are starting out, they are often looking for tips to make the venture a success. Here’s the advice I share with them.
Get advice…..and more advice!
Property can be a fantastic investment, but it doesn’t come without risk. Unless you’re a lawyer, expert DIY-er and a financial whizz, you’re going to need a team of experts around you to offer the best advice so your investment is profitable. Your trusted team should be with you throughout your journey and not just during the initial stages. A mortgage adviser and lawyer will help you identify the risks involved and find ways to help mitigate them. Of course, we can also find you the best rates and structure on your mortgage for maximum return.
Understand the risk
The property market can be volatile, and as with all investments, it can come with significant risk if you are not prepared. Property prices do not just go up and when you are leveraging your assets, you could quickly lose your initial deposit and equity should the market drop.
It’s vital to understand the risks involved therefore it’s imperative to have trusted advisers on hand to help avoid or navigate your way through them.
Have a business plan
Buying a property and hoping for the best is not a sustainable business plan. You should have a clear goal of what you want to achieve and a solid strategic plan outlining how to get there. Whether you are planning on renovating to add value, subdividing land, or buying to hold, you should have a clear objective and fully understand why you have chosen your strategy.
Regularly review your plan to stay on track. If your plan isn’t working then change it, but never lose sight of your end goal.
Research the market
When buying an investment property, leave your emotions at the door. Know the area well and find the property that best meets your criteria and not your decor preference. Before you set foot on any property, you should know the sales history, potential rental income and capital growth rates in the area.
Prepare for the additional costs
There are additional and ongoing expenses that need to be planned for. Have a budget in place detailing the costs of insurance, rates and interest costs. If you are renting your properties, you also need to allow for repairs and maintenance, and periods when the property is vacant. You also need to build in the cost of a Property Manager if you use one.
Manage your properties well
Property investment is a business. If you are renting your property, start the relationship as you wish to go on; professional, fair and firm. All tenants should receive and sign a tenancy agreement outlining all the rules and legalities before the keys are handed over. We recommend you have the agreement looked over by your lawyer first.
If you are managing your own properties, maintain a good relationship with the tenants so you continue to attract the right type of people to your property. Do your homework and ensure all credit checks and previous landlord references are good and there are no tenancy tribunal orders on record. Respect is two-way so be attentive to complaints and carry out repairs within a reasonable timeframe.
Ensure the rent is always received on time and take immediate action to chase up if any payments are missed. The legal requirements around this are strict so it’s important to know the rules.
Ideally, consider using a professional and reputable property manager. They have strict processes in place and know the legal requirements. Again do your homework and speak to other landlords using their services before you appoint them.
If you would like more advice about purchasing your first investment property or freeing up equity in your home, give me a call and I will be happy to help.
CONTACT SALLY TODAY
027 579 5033
09 834 8682