17 Sep Become a successful property investor
It is an attractive market for a property investor at the moment so PPS have created a list of top tips to help you become a successful property investor.
With lower house prices, rising rents and improving mortgage deals, it is the perfect time to become a property investor, especially with the current low savings rates and stock market volatility. If you are a new property investor or a seasoned property investor, we hope that our top tips will help you become a successful property investor.
The first essential tip to becoming a successful property investor is to make sure you do your market research to find out about risks and benefits of buying property in your area. You may find that your money would perform better by purchasing a property outside of your town.
This leads us nicely to PPS’s second top tip to become a successful property investor which is choosing a promising area. However this does not necessarily mean the most expensive area or the cheapest area is the right place to buy. You need to find somewhere where people want to live and this can be down to a variety of things. You will need to think about the type of tenants and property you want to target then look at a town which has a special appeal to these people. Good transport networks are essential for professional couples as good schools are for families and universities are for students.
Now you need to do some property investor mathematics and work out how much rent you will receive for the properties in your chosen area compared to the cost of them. Most buy to let property investors want the rent to cover 125% of the mortgage repayments and most will also look for a 15% discount which protects against falling house prices. You will have to search for the best buy to let mortgage deals. Remember to allow yourself leeway for rate rises in years to come as this could be critical in deciding whether your investment will work out or not. You will also need to consider what will happen if your property is empty for two or three months, can you afford the mortgage repayments yourself? However, as a property investor it is possible to take out an insurance policy against your tenant if they do not pay their rent but this does not cover the property if its vacant.
PPS’s fourth top tip to becoming a successful property investor is to shop around for your mortgage. Don’t just walk into your local bank or building society, visit an independent mortgage broker to receive independent advice and exclusive deals.
When you visit properties, you need to put yourself in your target tenants shoes to see if the property is suitable for their needs. Students will want a property which is easy to clean and comfortable, professional couples will want a modern, stylish home without it being overbearing and a family will want plenty of storage space along with a blank canvas. There’s no point spending a fortune on expensive wall paper and carpets for a child to leave sticky hand prints over whilst their parents aren’t looking.
The next top tip to help you become a successful property investor is to be realistic and not over ambitious. Everyone has read storied about property investors turning into millionaires with huge portfolios but this type of property investor is few and far between. You will need to compare different property values by using their yield. This is annual rent that you will receive as a percentage of the purchase price and if you’re a property investor looking for property, visit PPS’s Latest Property Deals page where we detail each of our properties yield for you.
The main aim as a property investor is to sort the mortgage, tax and other costs, leaving you with rent money which will provide you with the cash for further investments. This means you will have benefited from the income, paid off the mortgage and hold the properties full capital value.
You must know the pitfalls of property investment before you invest. Think about house prices falling, if they fall any lower will you be able to continue with your investment and what will happen if you can not remortgage?
The last tip from PPS which will help you become a successful property investor is to consider how much you want to be involved in the management of your property. You can employ an agent to find your tenants and deal with any problems that may arise and they will know a good network of plumbers, electricians and other trades if anything goes wrong. Of course, you will need to pay them a management fee or you can rent the property out yourself but be prepared to give up a lot of time for viewings, advertising and maintenance. This is when you become a property investor and a landlord.