Even with a fluctuating house market, investing in property still offers a lucrative opportunity—if you do it right.
Sure, we know house prices are falling slightly in the UK. But, with fewer buyers around, this is a great time to pick up a bargain.
Before you reach over for your bank card, launching a successful property business hinges on more than just purchasing a discounted property and then renting it out.
Like any business, you need to be prepared and know your stuff otherwise you’ll find yourself losing money, rather than making it.
Here are six golden rules to help you launch your own successful property business.
Write a business plan
Investing in property, whether it’s to generate a passive income, or to build a portfolio, means writing a business plan before you begin.
This is your opportunity to outline everything from why you want to invest in property in the first place to your exit strategy. It’s a key step in launching your business successful and integral to helping you stay on track, reach your goals and mitigate any potential risks.
Your plan should cover the following two points:
Have you inherited money? Do want to grow a portfolio of properties? Do you want to create a retirement nest egg? To you want to generate an extra income on top of your day job.
What kind of properties do you want to invest in—buy-to-let or buy-to-sell. Do you want to be hand on landlord or use an agency? Do you want to grow your portfolio? If yes, over how many years and how many properties? Where do you want buy? Are you going into partnership?
Location is king
A common mistake is to become so distracted by wanting a bargain you end up buying in an area you know nothing about.
Without local knowledge (or at least a few local contacts) you won’t know whether you’ve bought in a good or bad road or postcode.
You also won’t know if there’s a vibrant rental market, what the going rates are or if it’s suitable for your target tenant profile. For instance, a three-bedroom house is more suitable for a family, but if there’s a lack of schools nearby or it’s located in an industrial area you might struggle to find tenants.
Know your tenant profile
Tenants are essentially your bread and butter, so you want them to be dependable, pay their rent on time and not destroy your property.
Ask yourself, who is your ideal tenant—what kind of person do you want to do business with? Are you going to rent to working tenants, housing benefit tenants or HMO tenants?
You should also consider what type of tenant will give you the best rental yield. If you’re buying in a university town, your target tenant will be students or if have city apartments, you’ll prefer young professionals.
Understanding your tenant profile will help you market your property more effectively and influence how you manage the tenancy.
Learn to spot potential
Think beyond a quick refurbishment, instead look at how you can get more from your properties. For instance, a large property can be turned into smaller units you can either rent or sell, or a large one flat can be turned into a two-bedroom property—immediately increasing its rental value.
Don’t be tricked by cheap prices
Just because a property is on the market at a rock bottom price, doesn’t make it a savvy investment. You strike gold only if it gives you a yield later rather than turn into a frustrating chain around your next when you can’t get rid of it.
Focus more on potential yield first rather than investing all your energy into finding a property you can buy for less than market value.
Plan an exit strategy
By having a clear exit strategy for your investments at the beginning of your business, you will save yourself a heap of money and headache.
Your exit strategy will outline the process for getting your cash out when the time is right.
And, there are lots of options available from holding onto a property, restructuring your portfolio or selling up entirely.
Need to sell a property quickly?
We know situations can change quickly—you find yourself suddenly saddled with problem tenants or facing unforeseen maintenance costs you can’t afford or simply the value of your property has depreciated due to economic forces—all these things can all impact on your cash flow.
If you find yourself losing more money than you’re making with your property, you may decide the best course of action to sell it quickly.
But, don’t worry if you still have tenants in situ companies like House Buy Fast will still purchase your property and offer you a fast turnaround so you stop losing money.
For more information go here https://housebuyfast.co.uk/