Your Guide on How to Start Investing in Property Part 1 - Don't View Any Properties Yet!

If you are interested in investing in property, then clearly one of the key ingredients is finding the right property for you.

However, I urge you to stop there before diving straight in. It is important to take stock of what you want out of property investment and to determine what you want out of investing in property. 

Before we even start to look at types of properties, strategies and to book viewings, there are some essential questions to think about before you start. 

What are your goals?

Property investors all have varied and different goals. You may have a particular figure in mind, be that a monthly income, or capital value of your portfolio. Your goals may be centred around your lifestyle, you may want to use investing as a way of funding holidays or activities, or to allow you greater flexibility in how you work and live your life.

For some, investing in property is the start of a long-term plan to grow their wealth, achieve financial freedom, leave a legacy for their family and future generations. For others, it may be the start of an alternative different career. 

Whatever your goals, it is important to map them out before you get started, so you can positively work towards them. 

How involved do you want to be?

Again, everyone is different. Do you want to be hands-on? Finding, viewing, buying your own properties, and making them tenant ready? 

This can be both full-time or part-time: do you want to be stripping wallpaper, designing kitchens, pulling up weeds or choosing colour schemes? For some, this is a great way to start investing, you may be able to save labour costs, and learn a great deal of valuable lessons. 

If you are renting out a property, do you want to directly manage your tenants, or do you want to outsource this to an agent? If you outsource this, the fees you pay should be only one of your considerations, the agents reputation, reviews, proactivity, location and relationships with trades are just as important. 

However hands-on you want to be, you should remember that there is always the opportunity cost of using your own time and resources. Account for this accordingly. 

At the other end of the scale, you can have a completely hands-off experience where you entrust others to find suitable properties, guide you through the admin process, introducing you to solicitors, brokers, agents and builders and keeping you on track so that at the end you have good properties that are let out and bringing you in a monthly income in line with your goals.

… and everything in between. 

Have you thought about a geographical area?

There is not one property market in the UK, there are hundreds of micro-markets, each with their own demographics, tenant demand, tenant type, infrastructure, job market, yield, capital growth and access to labour.   

We recommend that you have some flexibility when you are looking at your investment areas. Where you live may be perfect, but the chances are that there are better areas in which you can invest. 

However, investing far from home has its disbenefits, you are less likely to have personal experience about the area, and so you will need to rely on trusted partners to assist you in finding and managing your property.  

Are you aware of the risks as well as the benefits of property investment?

Many property investors will look to leverage their portfolio, by borrowing (Buy to Let mortgage) against the asset to accelerate their wealth growth.  As long as this is in line with your overall financial goals and tolerance level for risk, this can be very powerful. 

Leveraging will magnify your gains, but also it will magnify any losses. Any investment has a risk attached to it, and you should ensure that you conduct your own due diligence before financially committing. 

What are your competitive advantages?

“It’s not what you know, but what you know AND who you know”

Every investor brings with them a competitive advantage to the market. What is yours? It could be:

1. Time. You have the time to find the right opportunities. 
2. Experience. You could be an Estate Agent, a tradesperson, solicitor, accountant, architect or just have spent a great deal of time in and around property.
3. Speed. You are able to be decisive and move quickly to get a first-mover advantage.
4. Funding. You have access to liquid funds that means your proposal will be more attractive to the vendor.
5. Your Network. You have a network where you can leverage their time, experience and funding to your advantage. 
6. Systemisation. If you are hands-on, don’t underestimate the requirement to systemise your processes as you grow a portfolio, and the advantages of efficiency that it can give you. 
7. Location. You are on the ground where you are investing, or you know the area intimately. 

Once you know your competitive advantages, you can use them to great effect and seek support in areas where you are not strong. 

What team do you have around you?

Property is a people business, and to be successful you need the support of specialists to support you. These include:

Solicitors, brokers, architects, builders, contractors and tradespeople, letting agents, accountants, tax advisors,  project managers, estate agents, deal sourcers/ packagers, and investors

You don’t need to have all of these in place at the start, or for every investment, but you should start to consider building your team to support you. You should ask for recommendations from people you know and trust, but also seek references where appropriate. Sometimes you may have to kiss a number of frogs to find people you can really trust and rely upon. 

If you have the right team in place, look after them as they can save you a great deal of pain, issues and money. 

What is your exit plan?

You should think about your exit plan prior to investing in property. This applies to each and every deal that you do, as well as the long-term exit.

For each investment, you should have a minimum of two exit plans. Once you have bought a property, what do you intend to do with it? What is your contingency if that does not work? 

If you intend to flip a property, what are the implications if you cannot sell the property? Are you able to refinance and let out the property for a period of time until you can sell it? 

Looking at the longer term, are you looking to invest for a fixed period of time and sell your portfolio, or are you intending to pass this portfolio onto your children or another party? Upfront planning and structuring of your portfolio will have untold befits in the long run. You should always seek expert advice on this matter. 

Lean on experience

We jumped in feet first into our first investment property. We bought a one-bed flat in South London at auction in 2014. After the hammer went down, we completed our initial paperwork and then started to reflect on how to proceed. 

Whilst we had bought and sold properties in the past, buying at auction with the strict timelines and implications of getting it wrong put into perspective that we needed to professionalise our approach. This certainly did not happen overnight, but we have gone through several learning curves to get to where we are today. 

If you are interested in investing in property. Message me or register your interest here for a no-obligation discussion.