If you are just getting started in property investment, or are even a seasoned investor, knowing some of the classic mistakes that others are routinely making in the market will only sharper your investor toolkit, leaving you less prone to unnecessary financial losses, stress and time wasting.
It sometimes takes great knowledge, determination, and skill to fully grasp the property market, particularly the repossessed marketplace. Whilst small mistakes are inevitable and provide immeasurable learning experiences for any investor, knowing where they may pop up in the future is important. We have put together a few simple mistakes that should be avoided, or at least considered, to ensure your next property investment runs smoothly and is more enjoyable.
1 – Failing to make a plan and establish investment objectives
If you don’t know your destination, how can you plan to get there?
When there is a hot market, it can be easy to let your emotions take over and buy a property that appears to be a great below market value deal without having a solid investment strategy in place.
Having a clear plan before you invest, establishing clear budgets, timeframes and having an idea of the logistics needed to bring a project to completion is imperative.
Our investors are usually split into two groups, those who have a short exit strategy, wishing to buy below market value, renovate the property and sell at a higher rate that is more in line with local market averages. The other side are seeking to add to their portfolios with buy-to-let properties. Every investor is targeting a different demographic, location, property type and so on, but most importantly they have a clear idea of their purchase plan, renovation logistics and exit strategy.
2 – Do your research
Undertaking thorough due diligence is essential to any successful property investment. You should delve deep into an investment investigation, asking questions about the local area, property condition, market reports, planning permission opportunities or restrictions and many other possible limitations to your investment.
Figure out your cashflow and be confident that the investment will return what you expect, always leave a little leeway. Don’t forget to factor in possible void periods, and allow for an increase in mortgage rates, always play it on the safe side with you finances.
3 – Trying to do everything on your own
Often, many first-time buyers attempt to cut corners and save money by undertaking a whole real-estate transaction on their own. Professional services such as solicitors, estate agents, surveyors and other contracts have specialist skills that should be tapped into at every opportunity.
Having a trusted good of industry professionals around you will limit the scope for error and hold people accountable for their actions to ensure everything is done properly. At repossessedhousesforsale.com we have years of experience in the pre-sales side of the investment life cycle and regularly help investors find their next below market value property investment. Subscribe to have a look through our exclusive stock of repossessed properties.
4 – Securing poor financing
Property investors have the ability to fund their venture with borrowed money. Whilst this is a fantastic opportunity to spread risk, boost returns and yield on your capital investment, getting your financing wrong can be detrimental.
No one finance option works for everyone. We would always recommend using a trusted and experienced mortgage broker who understands the market and more importantly your needs.
5 – Poor financial management
Keeping a detailed record of all your expenses throughout the project and after completion is essential. With multiple factors to consider such as rental income, mortgage, maintenance, repairs, property managers, taxes, stamp duty, the list goes on.
We recommend having an emergency cash reserve to protect you against any short-term falls in rental incomes or any other unforeseen events.
The bottom line
The reality is that if investing in property was easy, everybody would be doing it. Fortunately, many of the struggle’s investors ensure can be avoided with due diligence and proper planning before any contracts are signed.
Repossessedhousesforsale.com have a wealth of experience sourcing repossessed investment opportunities across the UK and can assist in your property search. Subscribe today to have access to thousands of exclusive repossessed properties all within one cost effective and user-friendly investor platform.
If you have any questions whatsoever please get in contact with our 24/7 customer service team: firstname.lastname@example.org.