Property #NickStatman on Property Investment-
Everyone wants to know the secret formula to becoming a successful property investor. Everyone wants a clear, ten-step program that tells them exactly what to do to dramatically grow their property portfolio and reach millionaire status. Unfortunately, there’s no set path. There’s no magic formula or secret system; it’s all about trial and error. It’s all about hustle and self-discipline and learning how to balance waiting with taking action.
However, most seasoned property investors will agree that there are three golden rules of property investing. Following these rules can help you build relationships in the industry, grow your portfolio, find high-quality properties, and make a name for yourself in the industry.
Look For Motivated Sellers
The more time you spend in the property investing industry, the easier it will be for you to spot a motivated seller. If you can find and work with motivated sellers, you increase your chances of purchasing a property below market value or getting them to say yes to your list of contingencies.
Of course, most sellers don’t start as motivated sellers. They are bound and determined to get the highest price possible on their terms. But since one in every three home sales in the UK falls through, they can quickly get nervous and be willing to negotiate to sell their home. These are the sellers you’re looking for. Success happens when you can find an ethical, win-win situation for a motivated seller. They sell their property quickly so they can move on to their next venture, and you become the proud new owner of an investment property..
This doesn’t mean looking for desperate sellers and taking advantage of them. It means finding a way to make their situation work for both of you.
Location Is Key
Ask any leading property investor which is more important: buying a cheap property or buying a property in a popular area, and they’ll always tell you buying a property in a popular area. While it can be tempting to purchase ultra cheap properties in less than desirable neighborhoods and hope for the best, finding qualified tenants or buyers will be a challenge. Instead, look for properties that are in an area where people want to be. Before you start buying investment properties in a particular area, do your research. Look into what the plans are for this specific area.
- Are there plans for growth?
- Will there be jobs or universities in the area in the next 5 to 10 years?
- Will people want to live, work, and play here in the future?
These are important questions to ask yourself before investing in property. One of the most important golden rules of property investing is to buy property in an area in which people want to live.
Focus On Positive Cash Flow
One of the main reasons you got started with property investing is probably because you wanted to make a profit. This means that after paying all of your costs, including mortgage fees, property management fees and maintenance, you walk away at the end of the month with more money than you started with. Look into the average rental rates in the area. If you charge the average rental rate, will you be able to just pay the mortgage? If so, this home becomes a liability instead of an asset. Before you buy the investment property, make sure that whatever rent it brings in will cover the mortgage and result in a net profit. If it’s not going to make you money, there’s no point in buying it.
These may seem like obvious rules for investing, but you’d be surprised at how many investors go into this type of investment strategy without knowing these three golden rules. They buy a cheap property just because it is inexpensive without thinking about the location or its ability to bring them a profit.
These aren’t secrets. These aren’t tricks. These are foundational rules that will help you make smart investment decisions. To be a successful investor, you have to know how to play the game. This means doing the research, asking the right questions, and finding the balance between waiting and taking action. By taking these three simple yet powerful golden rules into consideration, you’re one step closer to a profitable and expanding property portfolio.