5 Successful long-term property investment tips
5 Successful long-term property investment tips
Property investment can be a great way to diversify your income. It has the qualities of a great investment- stable, long-term, low-entry and most importantly- rewarding. But if you ask any successful investor and they will tell you that it was not all cakewalk. Not everyone makes it to the top and all successful investors have successful investments all the time.
But the one thing that most of the investors agree is the fact they have all have their guiding principle, a set of rules they all religiously follow. It’s different for each of them but have some overlaps that all of them seem to never miss out on.
We’ll be discussing some of those principles in this blog, but before that we should talk about something more important.
What is a successful property investment?
A successful investment is simply a property with the following:
- High Rental yields
- Regular monthly returns
- Located in a high-growth area
- Has the best potential for long-term success
- Attractive to tenants
It can be quite difficult to find a property that has all these qualities but once you’ve found it- you have pretty much hit the investment jackpot!
You can always rely on the property to perform really well, provided it’s taken care of adequately with regular maintenance and energy savings.
Now that we know what a successful property investment is, let’s talk about how.
5 Tips that successful property investors swear by!
1. Timing your investment wisely
- Investing in markets that have high rates and dearth of properties might look attractive and rewarding but they also come with equally high risk.
- It’s wise to invest in neighbourhoods that are expanding with prices and sales of the properties on the rise, good affordability, low construction and high capital investment.
- Avoid areas where there is a singular economic driver. Cities, areas and neighbourhoods that have a single economic source run the risk of depreciation of property if the market crashes.
If you’re narrowing down good neighbourhoods, here’s a checklist that can help:
- Low crime rate
- Access to medical care and police stations
- Family-friendly neighbourhood
- Access to transportation
- Close to shopping centre, business parks and the city centre
Here’s a chart showing how the house prices in UK (outside of London) are quickly increasing.
Check out this great blog on the property hotspots in UK in 2021!
2. Managing risks
There are two ways you can manage your risks.
- Don’t spend most of your money into the investment.
This is kind of obvious, but it is difficult with more context. If you have a £100k, look for opportunities where you’ll only need to spend about a third or a fourth of your savings. If you’re borrowing a mortgage on your property, it’s good to aim for a 25% down payment and fix a budget, within which you’ll have to work around.
You will not find it hard to locate good properties in your budget.
- Maintain a cash reserve
Sometimes the property doesn’t always make the returns you anticipated and without a large enough cash reserve- it might be tough to mitigate the losses. It might not always be losses too, sometimes there are unexpected repairs, maintenance and refurbishment costs to cover. In such an event, you can’t run to a hard money lender with an obscene interest rate or even to a bank for mortgage.
While it’s good to have high hopes from yourself, you must make a prudent decision based on your reality and not let your emotions get the best of you.
There’s no harm in starting small and gradually building up your portfolio.
This goes without saying but consistency is the key to success and it applies to property investment too!
There are always going to be some bad investments, you’re always going to make some bad call and bad judgements- but there’s no growth until you reconcile with that fact. It’s easy to crawl back into your comfort zone at the first sign of inconvenience, but it’s more admirable to stand your ground, deal with the aftermath of a bad move and move forward with a renewed knowledge about the market.
You don’t get successful without seeing failures!
4. Boost your property value
House price growth over the years can increase the value of your property but it is not the sole reason. You can add value to your property yourself by making home improvements.
Here’s a small checklist of home improvements that are proven to add value to properties:
- Fixing structural issues with the property
- Old windows and fixtures replaced with new and elegant ones
- Creating attractive outdoor space
- Improving the exterior of the property
- Fixing any issues with wirings and electronics
- Fixing up an old kitchen and bathroom can be a major facelift for a property
- Sophisticated décor also does the trick
The BRR model of property investment depends home improvements to increase the value of the property.
And lastly, the most important of them all- patience.
Property investment is not an exact science. You can never say that what works for you today might work 10 years down the line. The forecasts are all based on the current trends. Forecasts from 2019 predicted a rise in commercial property investment in UK. But an unforeseeable event like Covid has completely knocked everyone off course.
It’s important to always have contingencies in place but most of all patience is the biggest requirement to being a investor. Property is a long-term investment; you get in while the market is young and reap the benefits after years. So, you have to be prepared to play the long-game, otherwise you will find it difficult to stay on and learn the skills of this business.
And like everything in life, you need to give yourself the time to learn and master a skill!
Understandably, property investment is a daunting business with lots of money and business acumen involved. But all these skills are learned from mistakes, perseverance and the drive to be the absolutely top of your game. A great place to start learning these skills is through our property investment courses. We at Cash Flow With Property understand that there is a need for property mentors out there to share their wisdom from their experiences throughout the years- so we did just that!
We have built a curriculum apt for everyone- from a novice investor to an experienced one, to get educated about the various strategies of property investment that have high cash flow, low-entry point and infinite room to improvement!
Visit our website to learn more about property investment !