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.