22-questions every property investor should ask

Property investing is attractive, exciting, profitable, and extremely rewarding.

As a Landlord, you get to provide excellent accommodation to your tenant, therefore, enhancing the quality of their life.

As an investor, you get the opportunity to create financial security through the use of smart research, leverage, and timing.

As wonderful as that may seem, there are certain things you need to know. We have listed 22-questions investors need to ask themselves before taking the plunge and buying a property. These will help determine if investing in property is for you, and knowing the answer will ensure you have a smoother experience along the way.

So, where to start?

1. Why are you investing?

Ask yourself why you're investing, and what you want from it. Once you are clear, you’re halfway there. There are a lot of useful strategy planning tools out there that can help you on your journey. It can also be helpful to view a goal more as a strategic vision. Often, having a firmly fixed goal can cause rigid thinking and missed opportunities. It can be more useful to know what you want but have the flexibility to see better ways of doing things and to adapt to any bumps on the road.

2. Is property for you?

Only you can decide, buying property is a big step. It's useful to way up the pros and cons when deciding on a strategy. There are challenges. However, you can appoint professionals to help with most, and once the property is up and running its pretty self-sufficient. Headaches will arise, developments get delayed, lenders can be picky, and solicitors are often slow. You have to be prepared for frustration and be able to deal with it. Working with good people is critical, and once it’s all set-up, it takes minimal effort to run.

3. Is it worth it?

I can say with absolute certainty, yes! Over time with the right strategy and proper management investing in property can give you financial control and independence. If you approach it correctly, it is not that difficult. Because of the fundamentals and growth potential in the market, you can put together a plan that is achievable and easy to follow. Also, investing in property has the added advantage of leverage which massively enhances the returns you can make in the time it takes to achieve them.

4. What’s your strategy?

Without a strategy, you are not likely to get very far, and you will experience stress, headaches and the hassle that a poorly managed property or portfolio will cause. It’s essential to have a plan that is right for you and your lifestyle. You have to look at different approaches, and weigh up the pros and cons of managing them from a distance.

5. Are your finances in order?

If not, sort them out. The greatest strategy in the world is useless if you can’t implement it, and without money, you can't invest. Your circumstances impact the options available to you. Expat & foreign investors face heavier scrutinisation from lenders. Therefore, proper financial management is vital. Property investing is a business, and you should approach it as you would any other commercial venture. Having systems in place and being organised will ensure you set up a seamless, well run, income-generating machine.

6. Do currency exchange rates affect you?

Currency exchange rates are often overlooked and can impact your investment from day one. If you get paid in a foreign currency, it can have significant positive or negative consequences—from obtaining financing to the income and return you eventually realise from your investment.

7. What’s your budget?

How much are you going to invest? Once you have your strategy in place, stick to it! Be conservative with the numbers. It’s essential to be realistic if you are to succeed. Setting unrealistic expectations will only set you back. Over time, property investing can create unbelievable results with relatively low investment amounts. However, it takes discipline and patience.

8. Where should you invest?

Your circumstances and investment objective will dictate which property you buy and why. If you are an investor, then emotion shouldn’t come into it, you will look at the numbers, and if they make sense, you do it. If you are looking at somewhere you may live, a holiday home or an apartment for your kids, then you will view the investment differently.

9. What should you buy?

What type of property you buy will depend on the strategy you use. Some investors are looking for income and others are focused on capital appreciation. Different approaches will produce different results. Many people prefer newer apartments as they are less maintenance, easy to run and have on-site facility management; others prefer older properties that may offer the opportunity to add value and resell for a profit. You must weigh up what works for you.

10. Can you get financing?

The biggest perceived challenge for expats and foreign investors is getting a mortgage. However, there are options out there and learning to navigate the overseas mortgage market and learning how it works is important if you are serious about investing. Also, understanding the risk of not getting financing is just as significant.

11. Should you buy through a company or an individual?

Recent changes have resulted in many investors buying through a limited company. The question of whether this is a good idea or not depends on your circumstances and if it’s an option that’s available to you. Once you understand how the different structures work, you can relate it to your situation and decide if it is something you should do. Expert advice is essential.

12. Is now a good time?

When you understand the economy and how it relates to the property market, timing an investment becomes much easier. Learning how money is created and how it ties into the real estate market is useful, as there are regular economic cycles, and understanding them can give you an advantage and make sure you don’t get caught out when the market has a downturn.

13. Do you have the right solicitor?

Having been involved in hundreds of contracts, it’s astounding how bad some solicitors service their clients. Not having competent legal representation can be the biggest headache of property transactions. You need to know you have a good one and what to do if you find yourself with a bad one.

14. How do you manage completion & handover?

If you're buying a new flat or a house you should get a snagging inspection. If you’re investing hundreds of thousands of pounds, it’s a good idea to do so. Most good letting companies offer the service, which is ideal for overseas investors. A snagging company will identify issues and make sure they get sorted out. Meaning your tenant won't have any problems or complaints.

15. Should you buy furniture?

If you buy furniture for your investment property, there are a few things you need to know. The furniture landlords provide must be fire-resistant and comply with landlord regulations. There are lots of furniture pack companies out there offering solutions. You need to weigh up whether a furniture pack makes sense for your type of investment and also makes sense financially.

16. How will you manage it?

If you’re not in the same country as your property having systems and help on the ground is essential. If you’re not from the UK, you need to understand the nuances of the market or have an advisor that can help you. Having a good mortgage broker, accountant, tax advisor, and letting & management firm will be the key to your success.

 17. What if it doesn’t rent out?

If you do your research and buy in a decent area, it is unlikely that your property will be unoccupied. The UK has a heavy shortage of good quality rental property, and if you buy at the right time and a reasonable price, it’s hard to go wrong. A good letting agent will be able to advise on the best way to increase interest in your property, and there are rental insurance options out there. However, they can be expensive.

18. Do you need insurance?

Although your tenant should insure their possessions, you are legally responsible for covering your mortgage and insuring your property. New properties will have building insurance, and if you bought a furniture package, you might want to consider contents insurance. If you purchased an older property, you would also need to get building insurance.

19. Is it tax efficient?

Even if you’re not a UK resident, you need to pay income tax on your rental income. You’ll also be subject to capital gains tax. However, you can offset costs to reduce your tax bill. You need an accountant that can make sure you are operating legally. Some investors will qualify for the UK personal allowances.  

20. What if there are problems with a tenant?

If you have done the right screening and background checks, problems with tenants are pretty rare. However, they do occur, and dealing with that from far away can be tough if not impossible. There are ways you can limit or avoid these types of situations and specific actions to take if you find yourself in this kind of situation. The right letting agent should be able to help you deal with most issues.

21. Is it making money?

If you’ve done your homework, you should be okay, but if your property isn’t making money, you need to sort it out asap or have a plan in place to make it profitable. Challenges can arise and cause problems in your portfolio, but with careful planning and stress testing, you should be able to mitigate the most risk. That’s where proper management is critical.

 22. When should you sell?

It’s common to hear investors say “Never sell a property” and under a lot of circumstances that may be right. However, selling might sometimes make sense. You may need to offload properties that are not working or invest your money elsewhere. So, should you sell? That depends—some people may rely on it, and others may never consider it. It’s all down to what works for you, and it’s good to understand and consider all your options. Learning more about the selling process will help if you ever need to make that decision.

Summary

Often, investors are not aware of how much research and care should go into buying a property. Knowing the answers to these questions will significantly increase the chances of your success and the experience you have along the way. Investing in property can be one of the best decisions you make, but like any business, you need to approach it correctly.

Asking yourself these questions will help you understand if property is for you and how to get started the smart way. If you like our ideas and would like to gain access to loads of free education on UK property investment, say hello! [email protected]