8 tips to get started with property investment



Getting sound property investment advice is a must if your dream of becoming the next Stan Kroenke is going to come anywhere close to expectations. It’s an incredible opportunity to create both a career and wealth if done correctly. But this niche doesn’t come without its pitfalls. 

Many have rushed in only to find that the glamour of creating a property portfolio loses its shine rather quickly. Our aim is to make sure that you don’t make the same mistakes. Instead, our 8 tips for getting started with property investment will shed some light on the does and don’ts and put you in the best possible position to make a success of your venture.

Buy In ‘Up And Coming’ Areas

Everybody knows someone who got lucky buying at the right time and in the right place. But property investment advice doesn’t come down to luck so you need to consider local areas carefully. 

One of the major factors that can influence the future value of a zone is any imminent infrastructure changes. crucial motorway links, train hubs and others will all play a major part in deciding the desirability of a local neighbourhood. There is also education, healthcare and other employment opportunities to look out for as well. Major new developments that are likely to create a lot of jobs can make certain types of housing very sought after. Teachers, nurses and other key workers will want to be as close to their place of work as possible and this will help enhance the value of your purchase. 

Even during hard times and economic downturns, up-and-coming towns and villages can always buck the trend. You may see national house prices fall across the board but if you’ve done your homework, it’s still possible to see decent returns on your investment. And you can bet your bottom dollar that if you spotted a bargain in an area that’s likely to take off over the coming years then others will have two. As more investors take an interest, demand will increase and you may even see short-term games as well.

Don’t Go Too Big Too Soon

It’s always an exciting time when you flip your first property or take on a rental investment and see the happy tenants move in and set up home. But a savvy investor won’t automatically assume that every time will be just like this. 

It’s a familiar story where an inexperienced buyer takes on a project that is far bigger than they expected. And this can lead to huge financial stress and even failure of the project completely. It’s always best to avoid multi-property buildings such as blocks of flats as well as difficult rebuilds and over-ambitious extensions. And always think carefully before taking on a building with listed status as these rarely go to plan and a large contingency fund needs to be in place. Many projects like this can be a labour of love and should be left to those with much more experience. 

The best property investment advice is to get your feet wet with a simple house or flat purchase and document every step of the procedure. Know exactly what you did well and what you didn’t. And learn from your mistakes. The next step should be something similar or perhaps slightly more ambitious to help you progress slowly and make sound choices along the way. It is an exciting opportunity but never let your heart rule your head when it comes to property investment.

Budget Carefully

You might be surprised to hear that many first-time investors don’t give their budget enough consideration. It’s easy to be blinded by high yields and returns on investment. But when you get down to the net values and take everything into account, the outlook can be very different.

The basic return on a property investment is simply the resale value minus the purchase price—also known as the capital gain. But things are never quite so black and white and you need to take into account many major costs that will drastically reduce that return. The same applies to the yield with a rental property. It’s basic maths to calculate but the reality could come as a surprise. The potential rental yield is the annual rental income divided by the original purchase price. And then multiply that figure by 100.

For straightforward house purchases, the biggest costs will be taxes and legal fees. But if you intend to enhance the look of that property then you need to know exactly how much those works will cost. This will affect the bottom line and increase the time it will take to see the full return on your investment. Even when you have a quote for any work that you plan to undertake, always have an additional fund waiting in reserve.

Take Care at Auctions

Many professionals handing out property investment advice may well be against using auctions while you are lacking experience. The major issue here is that the excitement of an auction can often override logic and mistakes can be made. 

All too often, we see potential investors paying way over the odds because they’ve fallen in love with the property and think they’re getting a bargain. Getting emotionally attached to an investment will stop you from seeing other opportunities that may be better suited to you. Another issue is that purchasing at an auction rarely gives you the chance to fully assess a property and any issues that may come with it. You need a keen eye for detail so if you do go down this route, then make sure you have a professional builder or surveyor give you their advice before you take the plunge.

Maximise Available Space

Maximising the living space is fantastic not only for rental properties but for resale as well. Families often need as much space as possible and converting your 2-bed investment into a 3-bed can add big gains as a result. Consider the size of the kitchen, bathroom or other common areas that could be reduced in order to create extra bedrooms. Also, consider any storage that may be surplus to requirements. If the house has an attic, you may not need a huge built-in cupboard that takes up extra square meterage in the entrance hall, for example. 

Extending a property will usually add extra value to a house. But the cost of those works can eat into potential profits so you need to weigh up whether or not it’s worth the initial outlay. It all comes back down to your budget and taking advantage of every last inch of space.

Seek Advice from Local Property Experts

Professional advice is always welcome. Anyone who has been investing in your chosen area as a house buyer, landlord or even an agent can offer fantastic insights. It’s never a bad idea to find out as much information as possible before you commit to a plan. But do be aware that other local investors may well have a vested interest in a specific property. And if this is the case, then you’d be best to seek advice elsewhere. Local estate agents are an amazing source of knowledge. And they can give you a great idea of how easily things sell or rent in certain streets and neighbourhoods. They will always be happy to share their thoughts with you.

Find The Best Mortgage Rates

The best way to find top mortgage rates is to do your own research and also make use of mortgage advisors as well. They will often have access to special rates that you can’t achieve by going directly to the lender. But this isn’t always the case. So do yourself a favour and shop around independently too. 

There are many different types of mortgages available. And If you’re looking to buy to let then this will be a specific product that you need to pay attention to. If you don’t have the permission of a mortgage lender before renting out your property, you could land yourself in hot water further down the line. 

It can also be difficult to find bridging loans to cover the cost of an investment while you wait for your return. Again, this is where mortgage brokers come into their own. They will know which lenders are more willing to work with new investors and offer competitive rates.

Spread Your Risk

Property investment advice, like most other investment tips, always highlights the importance of diversifying. Putting all your eggs in one basket will, generally, result in one of two outcomes; big profits or big losses. To create a sustainable investment portfolio you need to look at a range of different property options. 

A mixture of different house types along with flats and perhaps even student accommodation as well should all be considered. While one area of the market enjoys an uptick, you may well suffer in another. But over a period of time, the good times and bad times will level themselves out. And this gives you a chance to see more controlled returns.

Property Investment – Our Final Thoughts

It is important to remember that, as with all investments, playing the property market can go either way. But if you follow sound property investment advice and do your homework carefully, then you can definitely stack the odds in your favour. Going into an opportunity like this without sufficient research could spell the end of your adventure before it begins. So never jump in until you are 100% ready and sure that you can give your new project your full attention.