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!