Top 10 tips for getting started in property investing
Increasing numbers of people are turning to property as an investment, as we have covered in previous blog posts. Many have friends or colleagues who invest, and they too have a property ‘itch’ that they want to scratch. So, you are thinking about getting into property investing, but where do you start? What are the first steps to get going?
We will cover a few of, what we believe to be, the key considerations before you take the plunge into property:
- What are your goals? This is a step that is usually overlooked, but is possibly the most important one to think about. How you answer this question will dictate whether investing in property is actually for you or not, whether you should be buying and holding property or flipping property – as an example.
- Research what is actually involved in property investing. Many have a vision in their mind of what property investing actually involves, but knowing what you are getting into is important. The reality of investing can be very different from the perception, so being clear key. Talk to other investors and get their views, most will be happy to provide an insight.
- Develop a strategy / plan that helps you achieve your goals. The answer you provided to step 1 is your vision (ideal future state), but where are you starting from (current state) and what do you need to do to get from your current to future state? This forms the basis for your strategy / plan and will help you stay on track throughout your investment journey. It is important to keep reviewing your strategy and the performance of your investments to ensure you continue taking the right steps for you.
- Education and investing in yourself is the gift that keeps on giving. This is a cliché but it is true, and so ensuring that you start your property education / learning is essential. The things you learn will ensure you are working efficiently, save you money, save you time and help you to achieve your goals. This does not mean that you should spend all your savings on courses and training, but you should make sure that you have a plan for continuous personal development and speak to other investors.
- Mentor / support. We may be biased at Switch, but we feel that having a mentor who understands you, understands your goals, listens and is there to support/guide you is invaluable. This will help you learn whilst you earn, so to speak, and you will be taking action and learning along the way. There is a lot to learn about property investing and having someone you can go to for support and advice will save you a lot of money in the long run.
- Research the market. Where is the best place to invest in property? Don’t just buy in the area you live in because it is easy. It may be that your local area is the perfect place to invest, but make sure you do your research to validate your decision. If you are investing in Buy to Let, choosing the place to invest can be the difference between making money on a monthly basis and losing money on a monthly basis, regardless of what property you buy. It can also be the difference between achieving a 3% yield and a 12% yield (with or without capital growth), so do your research.
- Know your numbers. It is essential that you know how much money you are able to invest, what your running costs will be, the cost of ‘surprises’, and your realistic return from your investment.
- Start small. If you are getting ready to take the plunge, don’t start with a ‘monster’ project. This could lead to you losing all your hard-earned savings. Instead, start small and build up your confidence, knowledge, skills, contacts and team. This way you will be able to learn from your mistakes (there will be many mistakes – we are yet to meet someone who hasn’t made any!) and make better decisions in the process.
- Financial planning. It is important to seek advice from a good accountant, who will advise what the best approach is for you and will help with tax planning, advice around setting up your business e.g. personal names, or limited company etc. Getting this wrong could be an expensive mistake down the line, even if every next step you take is the right one. It is the foundation for your business (and investing in property should be viewed as a business).
- Take action. What sometimes happens when people start to think about what is involved, which may differ from their preconceptions, is stagnation and lack of action. The end result being that nothing constructive happens and, besides spending a few hours or days thinking about property investing, they are no nearer to achieving their financial goals. Make sure you are not one of these people. Doing nothing is far riskier than doing something with your money. Investing in assets paying passive income has to be part of your investment strategy, no matter what the asset is.
We want you to know the best actions to help build a solid foundation in property investing and be successful in achieving your financial goals. It is the ‘un-sexy’ work that helps you know what you want, the steps you need to take, how successful you are being and how to execute your plan whilst avoiding costly mistakes.
We can help you with all of the above – making your investment journey easier and more enjoyable. So, if you want to start, but need some support or guidance to help build your confidence and take action then please contact us for a free, no-obligation 20-minute consultation to see how we can help you get started in property investing – it could be just what you need to kick start your investment journey.