It’s the final countdown.
Over the course of our six part series “The Journey” we’ve looked at how to become a buy-to-let property investor in a simple, step-by-step process and we’ve now reached the final step – property maintenance and moving forward.
Most homeowners and tenants alike will understand the value of property maintenance. Over the course of weeks, months and years, houses suffer all manner of problems and the same can be said of property investments.
Burst pipes, damp and condensation, cracked walls and countless other issues will constantly eat away at your profits if not managed correctly but our pointers below should help you start proactively planning.
Finally, before we crack on, you can check out The Journey parts one through five by clicking here!
Cash flow management and sensible budgeting is an integral part of any business, property investment included.
We’ve already touched on this during the property hunt in part two of The Journey, which you can read by clicking here, but budgeting and saving towards an emergency fund is highly recommended. A good rule of thumb is to put away 10% per month if possible.
All manner of issues can creep up and although smaller jobs, like light bulb replacements, won’t drastically impact you, larger jobs, such as replacing gas boilers, can cripple unprepared investors.
As the old adage goes “Fail to prepare, prepare to fail”.
Budgeting is essential but property maintenance doesn’t start and stop there.
For committed property investors preventative maintenance is the next important step. By following a proactive approach you can potentially lessen the burden on your budget and overreliance on contractors and tradesmen.
Preventative maintenance can take many different forms, and the following list isn’t definitive, but we would recommend being aware of the following:
Damp and condensation: Damp and condensation can prove to be a silent killer in the property world. Without proactive attention and prevention, damp and condensation can cause extensive damage. Ensure that your property is properly heated, that the tenants use the heating regularly, and also that there is plenty of ventilation and fresh air.
Stains and leakages: Every property, whether it’s leased or used by the owners, will succumb to the odd scuff and marks but major stains and leakages are not to be messed with. Even the tiniest leak can cause major damage if left unattended for a long period of time. Invest in a trust worthy plumber who will do things properly and can also be relied upon during a crisis.
Drainage and Guttering: The outside of the property is just as important as the inside so keep an eye on your drainage and guttering systems. Regularly cleaning your guttering and drains can ensure everything works as it should, avoiding potential breakages or damage.
As already stated, this isn’t a definitive list but maintaining awareness of potential problems, through regular property visits and good communication lines with tenants, can help keep expenses to a minimum over the long-term.
All of the above can, of course, be handled by a letting agent if you decide to hire them to manage the property.
Preventative maintenance is a brilliant habit to develop as a property investor but unfortunately disaster will strike from time to time.
When this does happen, whether it’s a boiler problem, leak, electrical issue, something structural or something completely different, we would recommend calling on the relevant expertise available.
If you’re connected, have a large network or an existing property power team then this would be the time to call for help. If not, it’s time to ask for recommendations, open the Yellow Pages or use Google to get searching.
Either way, expertise is required. Certain jobs and certain issues, such as extensive refurbishments, call for a level of skill and experience way beyond DIY level and in that case it pays to pay a professional.
It may hurt but sensible budgeting should help during these emergency moments.
Moving Forward in Property
We’re almost there. We’re almost at the end of our property journey together.
After you’ve made the leap and started your first buy-to-let property you might be wondering “what’s next?” or “how do I move on from here?”
Depending on your aim, it could be a simple case of repetition. However, if you’d like to enter the world of serviced accommodation, flips or property development, you will have to alter your strategy accordingly.
You’ve made it to the end of The Journey: A Six Step Guide to Buy-to-Let Property Investing, now get out there and start doing, acting and making things happen!
If you’d like to continue your property learning and education you can find out more about our Property Success University by clicking here! For serial networkers out there, check out our Belfast Property Meet events by clicking here!
What Makes a Good Tenant?
So, before beginning the search for your ideal tenant it’s worth defining what actually makes a “good” tenant.
In this case “good” is subjective and relative to what you personally want but in our experience good tenants are reliable, pay their rents on time, have steady and stable employment and have capable incomes relative to their monthly rent payments.
To get this person we generally vet them both on and offline, in person and via the information they’ve provided during the application phase. This information usually includes their job, and place of work, their income, previous addresses, and if possible previous landlord testimonials.
Please be aware, regarding that last point, that previous landlords could be giving falsely positive reviews to move a bad tenant from their problem to yours. It has happened before and could happen to you so don’t rule it out.
Finally, in our experience it’s probably best to avoiding renting to friends or family. We’ll leave you to make the judgment call on this…
How to Find Tenants in Northern Ireland
Now that we’ve defined the type of tenant we want it’s time to start the search.
To do this we’d generally recommend using a mix of the tools available and this would include the use of local property portals, websites like Gumtree, Facebook and last but not least, ugly boards.
You’ve read that correctly. One of the most effective ways to advertise for new tenants, even in 2017 and beyond, is to stick up an “ugly” board outside the property asking for tenant contact or applications. Try it and be very surprised…
Regarding local property portals here in Northern Ireland we’d recommend using Property Pal and Property News.
After sourcing the right tenant (and please bear in mind that experience also plays a huge role in determining good over bad tenants) your next decision will be to manage the tenant yourself or to outsource to a local estate agent.
We’ve listed the pros and cons of each below:
*You will pay more tax if you manage your own properties. Letting agency fees are a tax deductible expense. In effect if you were paying £50 per month to your letting agent to manage your property you would pay £10 less tax as a 20% tax payer and £20 less tax if you were a 40% tax payer. It could be argued therefore, that the management fee would cost you £40 or £30 depending on which rate of tax you pay.
Finally, when you’ve sourced good tenants and decided on what management method to use, it’s important to maintain good relationships because the best tenants are worth their weight in gold to your business.
How do you maintain good landlord tenant relationships? First, we would highly recommend that you focus on keeping rents at an acceptable rate year on year. To do this you should be aware of the local markets surrounding your property and weigh-up what losing your current tenants could mean to your business if you do raise rents to an unaffordable level for them.
After that we would recommend that you focus on securing long-term tenants as they generally build a home and look after the property in question.
Finally always try to keep open lines of communication throughout the relationship and deal with maintenance issues as promptly as possible.
Until Next Time...
Analysis of a potential investment property is essential.
Before buying any property, you should clearly identify your strategy (buy-to-let, serviced accommodation etc.), target tenants, location, nearby amenities, cash-flow figures and also, crucially in this case, what needs to be done to add value and raise the overall price of the property post-purchase.
In the case of analyzing for potential refurbishments you should either have experience in that world or a close trusted partner who can provide the required guidance.
With this analysis you’ll be able to draw up plans regarding the work needed, expected costs and potential future benefits for the property.
Getting Bang for your Buck
Which leads us nicely onto point two… Getting bang for your buck!
When renovating or refurbishing your own home you will clearly want a high level of quality and expect to pay a cost relative to that.
The same, to a certain extent, can be said when refurbishing an investment property however here you will want to make the biggest possible impact for the least amount of money as every pound spent will eat into your future profits, whether cash flow or capital gains.
How do you achieve this? The key is to source tradesmen and materials at the cheapest price possible whilst still maintaining the standards and guarantees needed and if you lack the relevant experience to do this you may need to draw on your own property power team or trusted colleagues.
How to Add Value to your Buy-to-Let
As mentioned above, experience is an important element in this part of the property investing process but, for those of you just starting out, we thought we would highlight some of the key areas of refurbishment potential.
Kitchens and Bathrooms
It should come as no surprise, even to those with almost zero interest in property, that kitchens and bathrooms are huge variables in the value of a property.
These two rooms, due to both importance and appliances required, are generally the most expensive in any house and as a result they will have a major bearing on your future property value and potential rental incomes.
This reality means that buying an investment property with terrible, or inadequate, kitchen and bathroom facilities can represent a great opportunity if you have the know-how required, or can draw upon it, to improve both in a cost-effective way.
What are these improvements? We would suggest you focus on providing clean, modern appliances paired with stylish, but inoffensive, interiors.
Attic conversions are rife with legislation from planning regulators but, if it’s possible in your new property and you think you have the required space, it can represent a huge opportunity.
Depending on size and accessibility, you could sell the new attic conversion to potential tenants as a spare bedroom, an office space or simply more storage space, which is generally always a positive.
If and when properties lie in the hands of non-existent landlords, tenants who don’t care, or owners with other priorities, the outside spaces (gardens, backyards etc.) can quickly fall into disrepair.
Depending on size, privacy and what’s on offer, redevelopment and refurbishment can represent an opportunity to add value to the property and make it more desirable to your target tenant or future buyer.
Also, in most cases this work won’t require anything more than good old-fashioned “elbow grease” meaning you could do the work personally or at a cheaper cost.
Potential tenants, buyers and property investors all appreciate warm, energy efficient homes and as a result improving the eco-efficiency of a property can have long-lasting positive impacts on value.
This could include the installation of double-glazing (if it doesn’t currently exist), the purchasing of new doors or even the installation of a new heating system such as gas if it’s available.
It’s also worth remembering that poor energy efficient homes may fail the adequate standards for rentals in the future so it pays to make them as energy efficient as possible.
The opportunities mentioned above are all, in general, extensive jobs requiring specific materials and expert tradesmen in certain cases but that doesn’t mean smaller opportunities don’t also exist.
Depending on the condition of your investment property the interior décor can be improved with the aim of raising the value.
Tenants nowadays generally want a clean slate on which to build their own home, so we would recommend decorating in a clean, modern and minimalist way. This would mean focusing on using basic, modern furniture and clean, inoffensive colours, amongst other things.
The final issue to consider when planning any potential refurbishments or work to your property is that, as this is a property investment business, all work (including materials and labour costs) are tax deductible.
Something that could always come in handy when you’re sitting with your accountant at the end of the next tax year…
Until Next Time...
As with many aspects of property investing and development, experience is a vital element and factor in future successes.
Over time, through various deals and experiences, you’ll develop the knowledge and know-how to truly gauge what will add value to an investment property and how to do it in a cost-effective way.
With that in mind, it’s all about getting started because you can’t gain that experience without getting out there and operating.
Check out our Belfast Property Meet events and Property Success University if you’re unsure of how to begin or want to rub shoulders with other real-life property investors.
Can you feel that?
That’s progress you’re feeling because we’re creeping up to the halfway point of The Journey, our six-part blog series that aims to take you from absolute beginner to real life buy-to-let property investor with our help every step of the way!
If you’ve followed along from the start you’ll know that part one focused on getting organised (you can access it here) and part two (accessible here) focused on the property hunt.
Now, with our target investment property in mind, we’re going to journey through the buying process, from start to finish…
Picking Your Investment Property
Picking the perfect investment property isn’t a science.
In reality it’s more like a dark art where experience and know-how play major roles in the likelihood of future success.
There are so many elements and factors to consider when choosing your target property and that’s why we dedicated the entirety of part two of The Journey on this very subject. If you haven’t read it, and are interested in conducting a proper property hunt, you can check it out here!
After you’ve picked your target property it’s time for action!
Organise a Mortgage
Let’s face it, you can source the perfect property or the perfect investment deal but without the capital or finance, you’ll be able to do nothing more than dream about what could have been.
With this in mind we would highly recommend that you have some awareness of what buy-to-let mortgages are available before you begin any specific buying.
Be aware that buy-to-let mortgages are more expensive and generally require higher deposits. These deposits can be anywhere from 25-40% for the best deals. Generally speaking your typical buy to let mortgage would requires a 25% deposit, other fees include a brokers fees of approximately £500, stamp duty of at least 3% depending on purchase price plus legal fees of approximately £1000.
It is important to be aware of theses further costing when calculating your numbers to ensure the property in question is a good investment.
If you are considering building a buy to let portfolio it is vital that you get the right advice from a financial advisor who understands your vision and what you want to achieve (ideally an advisor who invests in property investor themselves). This is because there is a process to follow in obtaining and maximising the availability of mortgages.
It is very important that you understand the numbers and that your property will cash flow. We recommend that you aim for £200 per calendar month (Expenses less Rental Income = Cash Flow).
If everything still adds up then get ready to move forward.
Engage Your Property Power Team
We’re almost there but before making your first offer you might want to consider engaging your own personal property power team, if you have one established. If you don’t know what a power team is then click here, if you do, read on below.
Engaging with your property power team can be seriously beneficial in identifying issues or opportunities you might have missed.
By discussing your potential deal with your power team members, which may include your solicitor, accountant, broker and building contractor. They may help you identify that the deal isn’t viable, or, on the other hand, the potential you may achieve if you purchase and obtain this property.
There could be years of property knowledge and experience all around you, utilise it.
Making the Right Offer
You’ve made it!
You’ve inched forward, from getting started to finding the right deal, and now you’re ready to make an offer. Congratulations but don’t get too excited.
This isn’t your dream home, it’s a property investment so don’t dive in at the deep end and offer the asking price straight away, and don’t buy on emotion. Making the right offer means making the right offer for YOU.
To do this, consider your calculations (mentioned above) in relation to your mortgage repayments as well as factoring other elements into the equation.
Analyse what might drive the price up or down and move accordingly.
Plan for all Eventualities
Finally, even if you’ve had an offer accepted, please plan for all eventualities…even if it’s just in your head!
Deals fall through, sellers change their minds and properties come and go so don’t let any of the above impact on your decision-making.
After you’ve calculated your figures, identified the opportunities and possible obstacles that may present itself and ensure all avenues are explored. Proceed with your offer and sale process. If it doesn’t happen, simply begin the property search again. Be undertaking the process and learning from it you will learn so much from the process and will become a competent buy to let investor.
Until Next Time...
As always, it’s worth remembering that The Journey is simply the theory of property investing and nothing more.
To truly get going you need to get your hands dirty and get out there into the big bad world. It’s not as scary as it sounds!
For property networking we would highly recommend our very own Belfast Property Meet event. We might be biased but we recently celebrated our 6th birthday, no small feat in the events world, and have an incredible, engaged community that would be happy to talk to you, share stories, swap strategies and advise where possible. You can check out the monthly events, and more information, by clicking here.
On the other side, if you don’t live in Northern Ireland or the Republic of Ireland and don’t fancy travelling to Belfast Property Meet, you could check out our Property Success University by clicking here. PSU offers in-depth coaching and guidance that actually drives your property investing forward to achieve tangible results and we’d be happy to have you.
Next time on The Journey, as we begin to see the finish line in sight, we’ll look at how to “add value” to your newly purchased investment property.
See you then!
Welcome back to The Journey, our six-part series designed to take you, step by step, through the process of becoming a first-time property investor in the buy-to-let market.
In our first blog, which you can access by clicking here, we discussed setting up and getting organised. Now we’re going to focus on the property hunt and, more specifically, finding your first target property.
Before we begin we should note that your property hunt will most likely be both on and offline. You should look to combine all available tools, including the likes of Property Pal and Property News (if you’re here in Northern Ireland), Google Maps, local council websites such as the Northern Ireland Executive, NI planning portal and LANI and most importantly real-life site experiences from viewings.
Also, keep in mind that this is a process that also relies on experience and intuition, two qualities you’ll only ever gain over time.
Now, let’s begin!
For the sake of The Journey we’re focusing specifically on Buy to Let properties and the reason behind this is that most people buy their first rental property as a pension investment. The large majority of property investors in the UK and Ireland fall into this bracket and you might be interested in joining them.
When deciding on what type of Buy to Let you want to purchase understanding the numbers is vital. You should properly define your reasoning for investing in the first place and go from there. Are you investing for capital growth or cash flow or, in an ideal world, both?
After that you need to decide on what type of property best suits your needs and what type of tenant you are marketing to, e.g., Family, professional, student, or social market. Only after you’ve made that decision will you be able to identify and address essential requirements for your target market.
Students, young professionals, foreign nationals, young families and more all have different needs and wants and it’s highly likely that your new property can’t be all things to all people.
One great way to identify what potential future tenants want is to simply ask individuals e.g., established landlords or agents who are providing tenants a service that you want to provide. They might be able to give you key insights into the thoughts of a modern-day tenant in your target location.
Location, Location, Location!
It shouldn’t come as a shock to anyone interested in property but location is one of, if not the, key factors in what property you buy and any subsequent successes or failures.
Location is crucial no matter what target tenant you want but keep in mind that “a great location” doesn’t always mean “central”.
Young professionals might want central properties close to nightlife but other tenants will have different requirements. Young families might be searching for a home in the suburbs or close to certain schools. Students will most likely want accommodation as close to their place of study as possible and certain workers might want to be as close to a factory or place of work as possible.
Location is important but it can mean different things to different people.
What to Look For: Inside or Outside
After deciding on the type of property, your ideal tenant and the general location of your target property it’s time to get out there into the big bad world and start the hunt!
To keep things simple, as this is The Journey for beginners, we could recommend you split what you’re looking for into inside (the building) and outside (the building).
Outside should be fairly self-explanatory. Here you should analyse the neighbourhood and try to get a sense of the area as a whole. What type of shops, eateries and businesses operate in the vicinity? What type of schools, parks, amenities and services are nearby? Identifying these things should help you determine whether the area has promise or not.
On a smaller scale, but still outside the property, check if the property has private garden space and parking opportunities either on site or in the surrounding streets. Both elements can be highly desirable in certain areas and push up rental prices and overall capital growth…if the price you pay is right.
When judging the inside of a property you’ll only truly know what to look for as you gain experience over time but you should be aware that good quality kitchens and bathrooms are always a requirement and generally raise the value of any property. You might also want to consider how the property receives its heating and electric as tenants can have issues with utilities and we would always recommend getting a property survey done to identify any underlying issues that could come back to haunt you.
Alongside all of the above, to begin with, you could ask for advice from trusted individuals in the know such as tradesmen, other property investors or estate agents.
When to Purchase
Deciding when to make your move should be relatively simple. You should only move to purchase when you’re happy that your target property ticks all the boxes, e.g., type of property, location, figures work, and rental demand.
If you’re confident that you’ve found a deal that works then you should act, whether that be alone, as part of a group or with a joint venture partner but if you’re unsure then wait.
Proper research is essential if you’re to avoid the worst and this can take time.
Until Next Time...
Finding the right property, or conducting any sort of property investment hunt, is defined by asking yourself a series of questions.
Who is my target tenant? What do they need? Does the property cash flow enough, what if interest rates rise? Can I sustain this? Does this property require more investment post-purchase? e.g. painting, carpets, etc.
The more you question your decisions the clearer your thinking and strategising should become but if you’d like to push even further forward on your investment journey you can check out our upcoming Belfast Property Meet events here and our Property Success University here.
Next time we’ll take you through the purchasing process from bid to buy!
Property investing is a process like anything else and although there isn’t a specific end, if you want to continually grow, progress, and become successful there is a definitive start. A time when you stop dreaming and theorising and start doing, by this we mean taking action.
Over the course of this 6-part special blog series “The Journey” we’re going to detail exactly how to get started in property investing so that you can make your first moves.
It might seem scary to begin with but, when you learn and listen to feedback from others who have they experience, your fear is reduced.
Property investing is much like other businesses and projects and it is vital we treat it like a business from day one. This first blog in the series is all about getting organised and getting started.
Look around you, or get Googling, and you’ll quickly see that the most successful people, no matter what the field, are constantly trying to educate and improve themselves. Property investing is no different.
Educating yourself on different aspects such as having the right mindset to start off with, then ensuring you have get the right financial advice from specialist property advisors, knowing what’s involved in choosing the right property strategy for you needs, how to handle tenants if you choose Buy to Lets or HMOs, how to research, do your due diligence, spot value, search for new opportunities, and more, amongst many other facets of property investing, will return dividends in the long run.
You might know someone who owns one buy to let property and seems to do everything themselves. That’s fine, on a small scale. But if you want to scale up you will then need to start leveraging.
This isn’t just specific to getting started, it should become part of your property journey and if you want to progress and grow into a proper, established property investor, education is essential.
For information on our Property Success University click here.
Setting Up Admin
Starting off with good habits is the road to success. Organising and structuring your property investing actions from the beginning will prove seriously beneficial the further you go into this career and we’d highly recommend it.
Keeping records, spreadsheets and having practical systems established from day one is key.
What does this mean on a practical level?
On a very basic level you should have an accessible phone number and email address (these can be personal or business) connected to your property business meaning everything goes through one official property channel.
It is very important that you have a business card and bring some with you everywhere as it is professional and people will take you much more seriously. You should also start to think about simple systems to keep records of transactions (e.g. income and expense) for all future property related documentation. Being this organized will make your life so much easier in the future, especially when preparing for end of year tax returns.
At another level you might be faced with the decision between operating as a limited company or as a sole personal investor.
This type of decision can require specific consideration relevant to your own personal situation and needs to be weighed up very carefully. Our biggest piece of advice in this situation would be to seek specific advice from an accountant who specializes in property.
Network, Network, Network!
“If you want to go fast, go alone. If you want to go far, go together!”
It might sound like a clichéd Internet quote (it is…) but it’s very true in the property investing world and that’s why proper, focused networking should become an important part of your plans from the start.
If you want to operate in the buy to let market you’ll need to become acquainted with local estate agents in your target areas and you can use this property strategy very successfully on your own.
On the other hand, if you want to focus on refurbishments, flips and developments then you’ll need an established power team of professionals, tradesmen and contractors around you. Planning large developments? You’ll most likely need to talk to an experienced planning consultant who knows the ropes.
Whatever way you slice it, property investors need networks around them. Check out our blog on the perfect property “power team” here for more advice on the subject and for those of you interested in networking, you can learn more about our monthly networking event here!
Setting a budget is always an important step as it helps to define what you can or can’t do…to a certain extent.
In an ideal world you’ll have a healthy budget waiting to be used. This will most likely be used for the likes of your first deposit, refurbishment costs, professional services fees and so on.
However, you might be on the opposite end of the spectrum, without any sort of available budget, thinking that you’ve got no chance and no options. This just isn’t the case.
Money is essential in property investment, there’s no denying that but even if you can’t bring finance to the table you might be able to offer other assets, such as your knowledge, skill and experience. Plenty of willing Joint Venture partners are out there, ready to invest but unable to act e.g., someone may have the capital but no deal or time.
If you can bring a great deal to the table, hard work, experience or time to get deals over the line, or some combination of the above, Joint Venture partners will listen to you and maybe give you the chance you need.
Until Next Time...
In part two of The Journey we’ll focus on the who, what, where, why and how of the property hunt!
In the meantime, you can read more about Property Success University by clicking here and Belfast Property Meet by clicking here.
If you’d like to chat, or have general questions and queries about property investing, you can contact us here.
Getting started in property investing can seem like a seriously daunting task to those on the outside looking in.
The reality is that property investing is a process like any other. Those with decades of experience, in various deals and strategies, will obviously have a much more refined process but even beginners will undertake very similar paths.
We’ve met every type of investor during almost 6 years of running Belfast Property Meet events, alongside our own property investing, and all of them started in the same place you currently find yourself in.
Follow the steps below, consider your decisions thoroughly, favor action over inaction, learn from your mistakes, and you’ll be well on your way to a successful journey within the property investing world.
Save and Wait
This is probably the least attractive option for many people in today’s world. Nowadays we want everything instantly and quickly grow bored or annoyed if we don’t get it.
Unfortunately (or maybe fortunately…), this type of mindset won’t get you anywhere in the property world.
Depending on your circumstances you might only have one option available. Save a deposit, bide your time and wait for the moment when you can finally strike.
This option may suit someone who wants to buy one investment property with the end goal for a pension fund.
You have two options here. Firstly you could save up all the money needed to buy your first investment property, and receive rent each month (cash flow) and then wait for capital growth and a potential exit (sell) when the time is right (retirement).
The second option is to leverage the banks and avail of a buy to let mortgage, here the banks will lend 75% of the purchase price while you, the investor, invests 25%. You will then receive rent each month (cash flow while you’re waiting for capital growth). Keep in mind that property, over a 7-10 year time period, generally doubles in value so using this investment strategy can lead to a substantial portfolio in a short period of time.
Find Joint Venture Partners
If your own personal network allows it, you could find a joint venture partner who’s willing to join forces on a potential investment opportunity.
This personal network could include family, friends and colleagues but, if your own network is small or uninterested, you could also explore other options by attending property-focused events like our very own Belfast Property Meet and other similar opportunities.
In either case, if you haven’t followed our first step or simply don’t have the money for a deposit, property or project you will have to have the time, skills and experience to do the legwork and strike a balance with your partner if they are providing the finance. This legwork would most likely include identifying the potential property deal, structuring the deal, managing the property power team and managing the deal on behalf of your partner.
Decide on a Strategy
Strategy plays a huge role within the property investment world and it can be split right down the middle with cash flow (rent) on one side and capital growth (selling for profit) on the other side. In some strategies can have both cash flow and capital growth.
It’s likely that you already have a clear idea of which side you’ll be on for your first property deal but, if you haven’t decided, go off and consider the pros and cons of each.
After that you can delve into the details of whether you’ll buy to let property, a HMO (house of multiple occupancy) start a serviced accommodation business, consider flipping ( buy a property add value and sell it on for a profit) or attempt some other variation of the above strategies.
Don’t leave this to chance. Without the right strategy, there is no “perfect property”.
Getting your finances in order is just as important as deciding strategy, picking a property and finding Joint Venture partners.
This will include ensuring that your credit history and ratings are good, ensuring the figures of the deal stack up and that your cash flow each month is healthy and maintainable. We would also highly recommend that you stress test the figures against possible interest rate rises in the future.
Finally, if you’re considering leveraging the banks money to purchase property you need to know what mortgages are available to you and how to leverage that availability to your advantage.
Research the Property and Deal
All the above will be pointless if you haven’t properly researched the potential property and deal.
A successful property investment deal hinges on multiple variables including location, quality of the property (and refurbishment requirements), price, your reason for investing (cash flow or capital growth or both) and preparing yourself for the possible fluctuations of the wider property market (exit strategies).
Each of these variables will impact the success of your potential deal and change slightly depending on your strategy (as mentioned above) and target market (e.g. tenants, serviced accommodation guests, future buyers).
We would recommend going as deep as possible to fully understand your potential deal. You can check out our blog, 5 things to consider before investing in property in 2017, to kick-start the process.
Like we said at the beginning of this post you should always favor action over inaction.
The best theories and strategies in the world will be useless if you never attempt to put them into practice. However, moving quickly and recklessly will get you nowhere so take your time and consider each move with the seriousness it deserves.
If you’re new to property investing or aren’t exposed to many property investors within your own circle of family, friends and colleagues, we’d highly recommend coming along to the next Belfast Property Meet event.
There you’ll be able to network with other investors, from beginners to experts, and hear talks and experiences that could shape your own decisions in the future! You can also get in touch with us directly by clicking here at any time.
We hope to see you there!
Whilst serviced accommodation, also known as the provision of short-term accommodation of less than 90 days, is a relatively new property investment strategy here in Northern Ireland and the rest of the UK, it is becoming increasingly popular, both for investors and their customers (guests).
We’ve had countless questions about serviced accommodation at Belfast Property Meet, especially over the last few months, so thought we’d answer some of the basic questions in our beginners guide to serviced accommodation below.
What is Serviced Accommodation?
Serviced accommodation is fully furnished accommodation (generally apartments, flats or town houses) that is available for short-term stays (less than 90 days).
It offers travellers, business and tourists, flexibility, more choice and high quality accommodation. It offers property investors an opportunity to develop higher returns when compared to the buy to let and HMO (Houses of Multiple Occupancy) returns on investment.
What does Serviced Accommodation Mean?
Serviced accommodation simply means accommodation that is fully furnished and available to book. The “serviced” title generally refers to housekeeping standards and the list of amenities available within the accommodation.
How can I make money from Serviced Accommodation?
Serviced accommodation has become incredibly popular in recent years both with businesses, corporate clients, tourists and people staying for leisure.
Guests enjoy serviced accommodation for a variety of reasons including the fact that properties are generally located centrally in popular areas, offer cost-effective alternatives to hotels, feature on popular platforms like AirBnB, Booking.com and orders, and also provide that “home from home” quality and atmosphere.
Corporate and business travel customers are increasingly using serviced accommodation on their travels. They enjoy the space and choice to cook and this adds to the “home from home” experience when compared to regular hotel provisions provided.
All of the above means that there are opportunities to succeed and make money from serviced accommodation. In some cases you can make up to three times as much on annual rent when compared to regular buy to let options.
However, as with everything in property investing, success is determined by hard work, experience and the correct decisions. Serviced accommodation, alongside almost every other strategy, is heavily reliant on location. After that property quality and room prices become dominant factors.
To control quality you’ll have to develop a serviced accommodation property power team that helps and assists you in running and maintaining a successful business operation. This power team will generally include a cleaner, laundry provider, maintenance contractor and locksmith.
You may also want to add a “greeter” to your team to attend to guests when they arrive but this isn’t essential.
When you have everything set up you will simply have to refine your entire process over time through experience with multiple guests. In our experience your time will generally be divided up into three segments:
How do I get started in Serviced Accommodation?
There are countless ways to get started in serviced accommodation nowadays. The most important advice is to ensure that you set up proper systems to run and manage your business effectively and successfully. With the right property, channel manager (highly recommended if you operate more than one serviced property) and promotion, via major platforms like AirBnB and Booking.com, you can start up and run a serviced accommodation business.
As mentioned in the above section, moving forward, success will largely be determined by a number of factors including property location, quality of said property, quality of cleaning and housekeeping services, competitive pricing (high, middle or low end) and customer reviews.
Where to Next?
If you’re a complete beginner but are interested in the serviced accommodation world come along to our next Belfast Property Meet event.
There you’ll meet like-minded property people, from beginners right through to experienced investors, network with useful contacts and learn from guest speakers. Attendees will be happy to answer questions or point you in the right direction to get you moving forward.
If you’re from outside Northern Ireland, or simply can’t make Belfast Property Meet events, check out our brand new Property Success University here. Learn from experienced investors from anywhere in the world and make proper steps in the property world!
Depending on your own property journey there may come a time when you want to make the next step and venture into property development in Northern Ireland or further afield.
When compared to other strategies, such as buy-to-let, buy and flip, HMO’s, options and rent-to-rent, property development requires even more patience, due diligence, research into future proposals for the area, awareness of risk, experience and knowledge and most importantly, more than one exit strategy.
We believe that it’s completely possible to enter the world of property development with the right team behind you. Alongside this team it’s vital that you commit time to your plans and schedules, including timescale, costings, contingencies and exit strategies.
Hopefully some of the information below will help you on your path.
Property Power Team
As we’ve previously stated, unless you’ve got the time and skills to handle absolutely everything on your own (which is highly unlikely), having a well-established, trusted property power team will be crucial to your property development success.
For a Development project of a substantial size you will require, a planning officer, architect, a quantity surveyor, a construction company with all trades attached or sourced, solicitor, and investors or a finance company. You will also need an accountant, broker, building control support and administration support to keep account of all the costings.
Click here for our detailed overview of the key people every serious property investor should have in their power team.
Types of Property Development
Property Development is simply one arm of the property investment world with different strategies and tactics. It can be Residential development or Commercial development and you can choose to sell, or refinance the development and rent. It all depends on what you have decided as your exit strategy.
Development to Sell
Property development to sell, also known as flipping, can be highly lucrative, for investors seeking a quicker return with larger profit on their money invested, with the added advantage of no headaches that you may have from tenants. It can be subject to all the usual factors such as supply and demand, location, demand for property in the area, time scales and competitive selling prices.
It’s also highly recommended that you take sufficient time to carefully plan out your project, finances, timelines and prepare yourself for delays and contingencies.
Development to Own
Property development to own, which could come in various forms including buy-to-let, HMOs, serviced accommodation units, and any commercial units, buildings or blocks is generally considered a much more long-term approach.
Having a clear picture of your ideal tenant is recommended from the beginning as this will help to define the property development. Students, young professionals, social and emergency tenants, families, guests (leisure, tourist or corporate) or business owners all have different needs and requirements.
Keep tenant requirements at the forefront of your thinking throughout this type of project.
If you plan to enter the refurbishments world you should keep in mind that “adding value” to the property should be one of your chief goals. If planned correctly, this will ultimately lead to higher returns. One way to achieve this would be to acquire a property for less than it is marketed for by undertaking proactive bidding strategies that actively seeks out the best deals.
A general rule of thumb would be to aim to add up to 40% of the initial property value back into the property. Adding value is the main aim and it may involve extending the property or developing the roof space, or completely modernizing and making the building more energy efficient.
Another strategy with good financial end value is to change use of commercial buildings to residential, all subject to planning approval.
If you lack experience in this area you’ll have to rely on your property power team to provide support, advice and guidance when determining what to do and how much value it will bring.
Know Your Area
As with almost every aspect of property investing, knowing your area and choosing the correct location is one of, if not the, most important factors in your success.
We all know that the best property in the world won’t sell or attract tenants in a deprived area but it’s also important to note that the majority of profits are made during the buying process, especially if you plan to flip, so that means it would be expensive and inefficient to target the current most popular or on-trend areas.
Where does that leave us as property developers?
We must research, carry out due diligence, think outside the box, seek out and predict future areas of growth and popularity. Here in Northern Ireland, besides doing your own legwork and investigations in person, you can also use tools like Future Belfast and council planning reports to supplement your own opinions and experience.
For more information, you can contact us here.
If you’re serious about property development, or some other aspect of property investing, we’d highly recommend you come along to the next Belfast Property Meet where you can talk, network and learn from other like-minded investors here in Northern Ireland!
Recently we stumbled across Future Belfast, a brilliant online independent record and chart of the changing urban landscape within Belfast. We aren’t connected to the project but find it really interesting and you might too!
During our browsing around Future Belfast it got us thinking about how useful a resource this could be to experienced property investors and those wanting to progress further than their current standing.
Property investing is a long and winding road and at some point, depending on where you are in terms of experience, ambition and finances, you may feel that itch to make the bigger leap in your own journey.
As with everything, in property you need to go through the process of learning the basics and managing your numbers in a sensible fashion before you can make that leap but, if you’re ready, we have a few pointers on this subject to consider.
Where to Look
The old property adage “location, location, location” rings true no matter what level you operate at but awareness of the surrounding area and future plans and developments is crucial when you start to move up the food chain.
Making a move into the commercial world, HMOs or even serviced accommodation, amongst other options, could be seriously impacted in a multitude of ways by plans you have zero connection to.
A local example, here in Northern Ireland, is Ulster University’s move from a Jordanstown campus into Belfast city centre. This move includes custom built educational facilities and student accommodation and could prove a positive or negative for property investors in the city centre area. This is a judgement call and just one example of how an awareness of future developments can determine your next move.
This type of information can be found on Future Belfast alongside council sites and links and the same can be said of other areas of the country.
Information to Consider
As property investors know, everything in the area surrounding your property (or properties) is interlinked and related even when that doesn’t appear to be the case from the outside looking in.
Earlier this year we highlighted a few key considerations for first time property investors but for those of you experienced enough to make the next big leap, a greater awareness is necessary and warrants your consideration.
Another local example of this in action would be the proposed Belfast Transport Hub project. This project, currently in the pre-application phase, proposes a massive 1 million square foot Translink transport hub to be built at the Great Victoria Street site by 2020.
This site would obviously result in a massive increase in footfall and accessibility needs in the area and even during the pre-application phase this proposed £175 million development should be a huge consideration for any investor thinking about investing in that side of the city centre and surrounding area.
Using a tool like Future Belfast, or studying and participating in local council development plans in your area will provide you with more knowledge and awareness that can then be applied in your own property investing actions.
Building your property power team should also be another key consideration. If you focus on adding the right personnel (solicitor, JV partner etc.) they will be able to guide you and provide more than just what their title suggests.
Finally, another key tool, often underutilised by solo operators, is networking and we would highly recommend coming to the next Belfast Property Meet. As the largest and longest running property investment event in Northern Ireland you can be sure to talk to those that have been there, done it and got the t-shirt alongside new up and coming investors.
As we said at the beginning, property investing is a long and winding road but there are plenty of signposts out there ready to guide you when you’re ready.