How to become a successful property investor

At some point, you’ve probably heard statements like “property is a guaranteed investment” or that “property is a quick way to make money” from some self-professed property expert. You no doubt saw the immediate appeal of being a lucrative property investor and promptly wondered when and how to start buying investment properties for yourself. However, before you start planning your portfolio – the real question for any budding property investor is always going to be…

Should you invest in property?

First and foremost – and like most things in life – there are absolutely no guarantees when it comes to investing in property. What’s more, there’s certainly no such thing as a foolproof investment. Even if you follow every rule in the book, like all business ventures, property comes with a certain level of risk that you absolutely must be prepared for.

One of the biggest first-time property investor tips we can offer at this stage is to forget everything you think you know. Property is definitely not a get-rich-quick option and you often need a certain amount of collateral to get your investment off the ground in the first instance – just ask a first-time buyer who’s saving for their deposit and trying to get that crucial step on the ladder. That initial collateral is crucial. If you’re serious about buying an investment property and prepared to spend money to make money, read on…

What to look for when buying a house for investment

You plan to buy a property, but what next? If you’re going down the buy-to-let route, you’ll need the appropriate buy-to-let mortgage. Will you be a hands-on landlord and at your tenant’s beck-and-call 24/7 if there are problems with the property? If not, are you prepared to seek the advice and expertise of a letting agency to manage the property on your behalf and pay them accordingly? Also, can you afford to pay a second mortgage if your venture is empty for months at a time and otherwise face repossession of your investment?

Another alternative might be a renovation project, whereby you purchase a run-down property and give it a major facelift to modernise and bring it up-to-date. This can be a great alternative if you’re prepared to live in the property while the renovation takes place. You’re also more inclined to invest in better quality fixtures and furnishings to increase the value of your property as you plan on living in it after the initial renovation.

Before you know it, the years pass and you’re ready to sell. Hopefully, the property market has continued to climb and you’ve made money on your house, just by living in it. Just bear in mind that the process can be long and expensive – not to mention, you could effectively be living in a building site for months on end at the start and this is no way a quick-win solution to make money.

There are always going to be loads of things to consider when investing in property. Unless you’re lucky enough to have lots of disposable cash, then money will be a big factor in determining how stressful this venture will be. Saying that, if you’re clued up, are sensible with your money and prepared to play the long game, you’re already on the right track.

So, why are you investing?

Despite recent political uncertainty and reports of a drop in house prices, investing in property is still one of the best ways to get your money working for you. According to a survey by Gov.uk in March 2022, there has been an annual price rise of 9.8%, averaging the cost of UK property at £278,436. 

Figures like these are hard to argue with and one of the benefits of property as an investment is that it feels more tangible than say the stock market or even putting it in your pension pot. While all investment types have their pros and cons, many opt to invest in property as the investor can be hands-on with their capital and act faster to rectify than they can with their pension or stocks.

What to look for when buying a house for investment?

Knowing what to look for in an investment property goes beyond our buyer’s viewing checklist, here. A good start would be talking to a financial expert. Next, you’ll want to find a mortgage advisor or mortgage broker to help you navigate the best deals and offers. Mortgage Matters Direct are experts in buy-to-let mortgages and have access to exclusive mortgages which you simply wouldn’t find on your own. Even if you have a mortgage in mind, it might be worth giving them a call to find out if they could help.

Once you have an idea of budget and what’s affordable, it’s time to hit the road and find that dream investment. Go to an estate agent – their expertise and professional insight will prove invaluable to finding the right property. They’ll negotiate with the vendor on your behalf, give insight into the current market and guide you through your investment process.

First-time property investor tips

Now that you’re serious about what to look for when buying a house for investment, here are some first-time property investor tips.

Buy-to-let

Always put the tenant first – much like in a restaurant or shop, you’re ultimately going to be providing a service. Happy, long-lasting tenants will be the key to success in your first venture. This goes for how considerate you are in getting back to them and rectifying issues they have, and down to how you’ve decorated the property. Even the most spendthrift tenant will turn their nose up at a landlord who has done a poor renovation – it tells prospective tenants that you’re willing to cut corners and aren’t professional.

Flats vs. houses

Generally speaking, flats or apartments make better buy-to-let investments – especially when they’re a two-bedroom property with two bathrooms as they’re seen as being more flexible and convenient to the renter. The upkeep tends to be less on flats and they tend to be found in more desirable locations like town centres or near good transport links. That being said, people love an outdoor area, so look for flats with balconies or access to a garden if you want an even more appealing property that holds its value.

Look to increase the value

Seek to add value to your property wherever possible. For example, can the master bedroom afford an en-suite bathroom? Is there room for a loft conversion that makes for another bedroom? Could the kitchen do with a facelift and does the front garden make for a nice driveway? All of which makes your investment more appealing to future buyers or prospective renters.

Patience is key

Be patient and prepare to play the long game – property can prove to be a sound investment, but it’s certainly not a quick fix. Especially with regards to buy-to-let. In order to see a decent return, you’ll want to be committing for around a 5 – 10-year period.

Diversify

Let’s try not to run before we walk – but down the line, you’ll want to think about a portfolio. The key to a valuable portfolio is diversification. Aside from flats and houses what about branching out into student lets or even starting small and renting a garage? We all like the idea of a holiday home and you can get a good deal when you buy abroad. However, what happens off-peak when the property is empty? Or if something goes wrong – can you fix it immediately?

Area

Location-location-location! It’s not what you buy, but where you buy and we advise staying local. You instinctively know the market better than you think and your local knowledge of the area will prove invaluable when it comes to knowing the good places and the less-desirable ones. You’ll also know the schools and transport links, which make good selling points to potential tenants.

Furthermore, while up-and-coming cities or towns make for good investment property locations, don't overlook the suburbs. Towns with a Waitrose tend to push rental rates up as they’re seen as more high-end and good rail links will always be a draw to professionals hoping to slash the cost of commuter fares and save them valuable time on their daily commute. Also, areas near new housing developments imply that the area will have some long-term growth and investment into the area.

Recap: should you invest in property?

Property investment is ultimately about the numbers and you need to decide whether you are chasing short-term yields or long-term capital growth. Whatever your goal, you’d be wise to set yourself a budget and make a plan of action with attainable goals that can be achieved within a timely fashion as they’ll help you keep on track.

Furthermore, you will have to emotionally detach yourself from the process and think with your head and not your heart. Of course, there will be some things where you have to rely on your instinct but do try to always bring it back to the facts and figures on your plan.

**Correct as of December 2022