Investing in property can be incredibly lucrative, but there is always a level of risk involved in buying and selling real estate. If you’re looking to get into the property market, it’s wise to be proactive in maximising your chances of making money. In this guide, we’ll outline some steps you can take to lower risks and increase the probability of generating profits.
Choose locations carefully
Location is the top priority for buyers but it’s also critical for investors. Buying in the right location can improve your chances of turning over profits dramatically. Before you start organising viewings or trawling through online listings, research locations and gather information. Analyse data, get an insight into the local market and learn about different places on your shortlist. Who lives there? What are the main demographics? What makes people buy in that location? How many houses are for sale or to rent and how quickly are they moving? What is the average price and are there any buying or rental trends that are relevant to your investment goals? Focus on locations that align with your objectives and the type of investment that interests you. If you’re buying to let, for example, you should concentrate on areas that are in high demand among tenants.
As an investor, it’s beneficial to buy in places where the demand for properties is high or rising but it’s not always possible to secure investment properties in premium locations or established hotspots. If you can’t compete, or prices are too high in sought-after areas on your list, consider a change of tack. Buying in up-and-coming areas is a great way to boost your chances of making money. If you’re looking to purchase a house or apartment in a city, for example, look out for new developments or properties close to transport links, new infrastructure and regeneration projects.
Research investment opportunities
There are multiple ways to make money from investing in property. These include buying a run-down house, sprucing it up and selling it, buying to let, purchasing a holiday home or buying commercial premises. It’s important to research opportunities and decide what kind of property you’re looking for. Make decisions based on your objectives. If you have short-term goals, it may be best to flip properties and focus on buying a fixer-upper. If you want to make money in the long-term and boost your income in the meantime, buy to let is an excellent option. If you’re keen to capitalise on new trends, looking for a holiday home makes financial sense, with the demand for staycations on the rise. Take some time to weigh up the pros and cons, analyse risks and figure out which avenue suits you best.
Manage your money
Investing is all about making money. Buying an investment property is very different from finding a house to call home. Before you set out on a search for a house or flat, make sure your finances are in order, research funding streams and borrowing options and set a budget for the project. If you’re buying to let, find out more about taking out a rental property loan, research yields and running costs and fees and make sure you can afford the repayments. Ensure that your budget works for the properties that make your shortlist. If you are renovating an old house, for example, you’ll need to add costs, including labour, materials and building, plumbing and electrics services, to the purchase price. Keep a close eye on expenses at all times and try to maximise profit margins without cutting corners. The finish and spec should be tailored to the target client. If you’re aiming to attract buyers on the hunt for a luxury home, for example, they will have high expectations.
When you find a property that ticks most or all of the boxes, be prepared to negotiate and analyse data to make sure that you’re not paying too much. It’s wise to step away if there’s a bidding war and prices are escalating above market value.
Cater to your ideal buyer or tenant
When you buy a property to sell or let, it’s crucial to identify a target buyer or tenant and put yourself in their shoes. Understand what motivates people to choose one house or flat over another and use the findings of your market research to find properties that will appeal to the ideal tenant or buyer. Your criteria should reflect the individual or group you have in mind. For families, for example, proximity to good schools, transport links and green spaces will make your home more appealing. For students, it’s important to be close to public transport hubs, university facilities, shops and bars. For young professionals, being close to transport links, restaurants, shops and entertainment venues and town and city centres is beneficial. Tailor your search. Once you’ve identified locations, focus on finding the right property. Most families want a garden, a large bathroom and an open-plan kitchen while a home office is an attractive perk for young professionals.
Bide your time
Whether you invest in real estate, stocks and shares or commodities, making rash decisions can be costly. Timing plays a critical role in determining profit levels when buying and selling properties. If you buy and sell at the right time, you could make a substantial profit. If you move at the wrong time, there’s a risk of losing money or missing out on opportunities to earn more. Monitor the market, seek expert advice, read financial news and understand what drives price increases and decreases before you start looking for an investment property. Try to buy when prices are relatively low and the demand for housing is increasing. This is particularly important if you’re looking for a short-term investment. Unless you’re in a hurry to sell, it’s wise to bide your time until prices peak. If the demand outweighs the supply, people want to move and the market is buoyant, this is ideal for sellers.
Investing in property can help you to make money but there’s no way of eliminating risks entirely. To reduce risks and maximise your chances of generating profits in the property game, it’s important to choose locations carefully, carry out extensive research and tailor your property search to suit your ideal buyer or tenant. Figure out your finances, outline your investment objectives, set a budget and be prepared to negotiate. Bide your time to ensure you buy and sell when market conditions are in your favour.
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