Key Highlights

If you’re either a seasoned investor or just starting out, it’s always good to brush up on some tricks of the trade and learn some old and new tips on how to invest in property. The market is always prone to change, so it’s important investors stay abreast of any trends and new developments so they can get the most out of their properties.

Property has always been considered a worthwhile investment, often being a more secure and reliable form of income than other types of investment such as stocks and shares. It can offer guaranteed long-term income or quick short-term gains, provided it is done right.

Our investment property tips are great for beginner investors who are just starting their journey. While this isn’t an exhaustive list, we’ve also kept these tips exclusively about real estate property investment. Our top tips to keep in mind while looking for your next investment opportunity are:

Develop your knowledge

This applies to both new and seasoned investors. Learning and developing your property investment knowledge is critical to you getting the most out of your investments. 

For beginners, it’s important to learn the basics to understand the property market and investment world better. New investors should research thoroughly before acting to ensure the investment is suitable for them.

Having a baseline of knowledge can help new investors understand the property market better. They should know what property investment entails, how it works, and what are the benefits and pitfalls. Seeing an advisor can be extremely helpful. New starts should understand what property investment is, how it works, and how to get into it.

For more seasoned investors, it is still important to keep on top of their base knowledge. All investors should be aware of trends, markets, and locations. This helps them to make the right choices, get the most out of their property, and stay on top of changing trends.

Risk Assessment

So, you’ve decided that property investment is the one for you. While property might seem more solid and risk-free as opposed to other investments like stocks and shares, property investment is not without its pitfalls. Our second tip would be to do a risk assessment. Risk assessments allow investors to manage any potential risks and remediate developing ones so that they can enjoy their investments without things going awry.

The property market can fluctuate and be volatile – particularly in times of economic uncertainty. Investors can often see prices go up and down, but rather than this being a deterrent, investors should plan for potential losses and factor this into their budgets.

Other things to think about are interest rates, the stock market, and decreases in rental income. Tenants themselves can also be risks, with issues such as property damage, difficult tenants, and legal problems.

Set Long-term and Short-term Goals

Your investment goals should define your investment strategy. This can help you structure your strategy and what you need to do in order to achieve your goal.

What type of property do you want to invest in? What type of income do you want it to generate? Is it for short-term financial gain or as a main source of income? Do you want to snowball this property into running a property empire?

What your specific property investment goals are will tell you exactly what you need to do and how you need to do it. Scheduling an appointment with an investment agency is a great first step in the right direction.

For quick payments, consider buy-to-sell investments. For long-term goals, buy-to-let can offer reliable long-term income. It works for both short and long-term goals.

Budget

Making a reasonable budget and sticking to it is perhaps the number one tip for any budding investor. Investing in property doesn’t always just mean purchasing a property and watching the profits roll in. Investors should expect to see and plan for ongoing (and frequent surprise) maintenance costs. You should include finances for things like repairs, maintenance, property taxes, and any other expenses in your budget.

For those looking to buy a property to renovate and sell, it is important to calculate exactly how much this will cost. Renovations can be expensive and it is common for people to quickly go over budget as more and more work needs to be done. Having several assessments and price evaluations can give investors a clearer idea of how much they need to spend before they can rent out or sell their property.

Your budget should also include any mortgages if you require one. Head to our mortgage calculator to find out how much you could borrow for your investment here.

Location

The location of your new property is crucial for securing your return on investment. The location should be viable and attractive for prospective tenants. If it is difficult to get to and from, has little in the way of amenities and is in an unsafe neighbourhood, potential tenants could be put off.

You should assess everything about your potential new property, including:

• Job market: What are the job opportunities for the area?
• Population: Does it have a steadily growing population?
• Amenities: Is your chosen location surrounded by amenities? Tenants tend to look for properties that are near shops, restaurants, and other amenities. They prefer places that are within walking distance to other locations and have strong transport links. Locations that are close to clinics and doctor’s surgeries are also desired.
• Schools: Families are attracted to locations with good schools that are a commutable distance away.
• Crime Rate: A well-furnished and nice property can struggle to attract tenants if it’s in an unsafe location.
• Rental Yields: Look for locations that show strong rental yields. Ideally, investors should seek yields of around 5-8%, which experts consider strong. 
• Property Prices: When looking at rental yields in an area, also research the prices of other properties in that location. Capital growth, also known as capital appreciation, is the value of your property which can increase or decrease over time. Many factors can play into capital growth and property value, so research into this before making a purchase is key.
• Demand: Investors should look for locations where the demand for housing is high. The local real estate market should have a low supply yet high demand.

Invest In Off-Plan Property

Investing in off-plan property is when an investor buys a property while it is still in construction or planning. Sometimes investors pay deposits before a project starts, but usually, they wait until construction begins.

While it might seem like a very long-term investment, off-plan properties bring a lot of benefits to the table. Purchasing off-plan property can provide lower prices, more selection of units, and even the option to customize units. 

Developers often offer a lot of incentives to attract investors, such as good interest on deposits and discounted prices. Property developers often offer discounted sale prices for residential units to entice new investors. Discounts can even be 25% below market value. This is attractive to investors as they can receive a higher return on investment when they let or sell the property later.

Buying off-plan properties can provide peace of mind and security since developers construct new properties to modern standards. Old properties run the risk of needing frequent repairs.

At North Property Group, we specialise in premium off-plan properties. To speak to one of our advisors, find our contact information here.

Organise Your Finances

When purchasing an investment property, budgeting is just the tip of the iceberg. Some investors fail to consider costs beyond the property price tag. Additional costs occur throughout your ownership, some more surprising than others. Many investors can benefit from meeting with an investment firm to discuss their finances and receive personalised advice.

Investors need to consider how their new property investment will affect their taxes. You should consider tax payments as part of the overall property investment budget.

Tax payments include income tax, capital gains, and stamp duty. Capital gains are the tax paid on the profit made from selling your property. Income tax is the tax paid on your earnings while letting out your property. 

Other “hidden costs” investors can accrue are inspection and valuation costs from building inspections. These inspections are critical in finding anything wrong with your new property. Mortgage lenders often require a property valuation before granting the loan.

Investors should also factor in the cost of insurance, such as landlord insurance and public liability insurance. Other fees include property management service fees and solicitor fees.

Keep A Positive Attitude

Investing in real estate isn’t for everyone. It can be difficult, costly, and time consuming. Starting out with — and maintaining — a positive attitude can help you when times get tough.

Developing a baseline of knowledge and doing their research is important for new starts. Setbacks can be quite common and frustrating, but it pays off in the long run. They should be patient, positive, and open to learning.

The property market can change, often quickly and without warning. The best investors will be adaptable and willing to learn from these trends and fluctuations.

And finally, being prepared is key. Learn from your mistakes and adapt your behaviour accordingly. Investors who come out on top are the ones who have prepared themselves for any challenges. Preparation allows investments to stay successful, even in turbulent times.

Build A Portfolio

For more seasoned investors, diversify your investment properties by opting for a range of property types. Create a portfolio with various houses and flats in different areas to attract different tenants. Building a real estate portfolio can help investors achieve their financial goals faster while also mitigating risk.

It can help investors weather some storms as the market changes and fluctuates. If one location suddenly sees a drop in yields and house prices, your properties in other locations might not see the same change, holding onto their yield and value. If one property sees significant damage or destruction, either intentionally or otherwise, investors can still gain income from their other investments while remediating the damaged one.

Choose A Property Management Company 

Investing in rental properties can be time consuming and financially costly. To help with property management, many investors choose to use property investment firms. These firms can connect investors to estate agents who can physically manage the property and attract tenants. 

They can also offer support and advice when you are buying a property and guide your decision. They can manage rental costs, set budgets, and record transactions. They can help to arrange repairs and maintenance. They also manage tenants and their applications, performing screening, writing agreements, and managing payments.

Investors with multiple properties often use these firms to help manage them as they lack the time to do so. They can also use these companies for advice and guidance while navigating purchasing and finding a mortgage.

Summary

It can be hard to choose the right property management company for you. Here at North Property Group, our experienced team can help you find the best investment opportunities for you.

We have a deep and rich understanding of the UK property market. We can offer expert guidance, helping you make the most out of your investment. Call us today to unlock the investment potential in the UK.