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First Time Property Investment

5 Steps to Success

By Craig UptonPublished 2 years ago 3 min read
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Are you thinking of purchasing or renovating a property with the intention of reselling or placing on the rental market? It is important to ensure you choose a property than you can potentially add value to in order to reap a healthy profit.

If you have made the decision to become a property investor and are ready to take the next step, it is vital that you fully investigate the property you are planning to buy. The type of property and location should be carefully considered before starting any development project.

Today we look at 5 tips worth considering when taking the plunge:

1. Location, Location, Location

It cannot be understated how imperative it is to research the location of the property you are looking to invest in. Check the local market for data on rentals and house prices, as well local amenities and transport links. The more attractive the location, the more likely to sell, rent quickly and maximise profits.

2. Property with Potential for Profit

The property you are investing in should have a clear potential for profit, in other words, you need to be able to add value in order to sell at a profit or rent out at a profitable rate.

Things to look for can include loft space that can be converted, gardens that can be upgraded or sold off, outbuildings, and properties that can be converted to HMO’s (house of multiple occupation).

It is important to be careful of any structural issues because this can mean a lot of work and expense to correct and will eat into any potential profit or even result in a loss. Getting a professional survey will be beneficial to ensure there are no serious issues with any property you may be considering.

The more work that needs to be done to bring the property to the market, the more you will need to initially invest. As a first time investor it always advisable to start with a project that doesn’t require too much upgrading.

Comparing the property with similar properties in the local area will give you an idea of the potential market value for the home you will be renovating.

3. Buy in Your Local Area

For first time buy-to-sell (or rent) investors it is wise to buy in the area you live, preferably within an hour’s drive. There are various advantages to this, with the most obvious being that you will be able to do or oversee any work without needing to travel too far.

If you have employed a site manager to run the project, you will be able to visit the site regularly to check everything is going to schedule and plan.

Familiarity with an area is a bonus as you are more likely to know the market and the local amenities and attractions. Finding a great deal on a property is also more likely as you can jump on an opportunity quickly if you live locally.

4. Do Your Calculations

It’s ok to be ambitious, but just as important to know what your limits are. Calculating the cost of an investment project cannot be understated and is imperative if you want to maximise potential profit.

To be successful you will need to purchase a property that needs repair or renovation and calculating the cost of the changes needed will determine how much you can profit. The larger the project, the bigger the risk, but, also potentially the bigger the reward.

5. Choose Your Lender Carefully

For new comers to the property investment market it is always advisable to use a reputable broker to help you find the best possible buy-to-let, buy-to-sell or bridging finance product.

There are several options for investors when looking to financing their projects. An experienced broker will be able to advise the best course of action and will have access to lenders who are not available to the general public.

So in summary, property investment is not for the faint hearted, however if you do your homework and follow the advise above, you could see a lucrative return on your investment.

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