Leave out emotion
Many people fall into the trap of letting their emotions make decisions. In property investment, people are often in conflict between their head and their heart. You must go with your head as this will help to eliminate any rash decisions. Think about the process and outcome logically, and don’t let emotions sway your decision. Think of property investment in the same way you would a business — weigh it up and don’t jump to any conclusions.
Do your research
You must first establish the tenants you are targeting, as carrying out thorough research before buying your first property investment is essential. Location is one of the most important factors, and one that must be considered first. Make sure your investment is situated in a location that will attract the type of client you are wishing to rent to. This way, you are more than likely to secure the rents you are expecting as the property will appeal to your target market, also keeping time of vacancy to a minimum.
Calculate expenses and profits
Profit is the ultimate goal and one that can only be achieved successfully with a number of calculations beforehand. Start with calculating the money that you already own; how much of this are you willing to spend on your investment? Next, perform thorough due diligence on numerous properties to work out potential rental returns, thinking about how much scope there is for capital appreciation and whether the location suits your target tenant. Now that you should have an idea of price and a rough estimate of running costs, you can begin to get an idea of your potential profits. However, don’t be disheartened if you fail to achieve high profits you have set for yourself. Just remember, property investment is very much a long-term investment, where value of property and percentages of rental returns are forecasted to rise. Be patient, but ensure you have a rough idea just to keep yourself in a safe zone.
Starting small is one of the best ways to familiarise yourself with the process of property investment. Even if you have a lot of money at your disposal you should start small, as your first investment should be a learning curve and will be a process that involves learning the market and learning from your own experiences. If you start small, then if any hiccups occur along the way, it is better that they go wrong on a smaller scale. Risk taking can be a lot easier to do if you don’t have huge amounts of money on the line, so be smart and start small, learning from your experiences and growing your investment. RW Invest have devised a top 10 guide to help you get started in property investment and prepare you for getting started on what can be the most profitable journeys you take.