Property investment is a prospect that many people are attracted to – and it’s no surprise. It’s an exciting sector with great opportunities and a wealth of potential for high yields.
But too many investors make the mistake of getting overexcited about the opportunity and jumping in feet first without taking the time to do their research and gain the necessary knowledge to be able to make informed and potentially profitable property investment decisions.
In this post, we’ve outlined the top five steps that you need to take when purchasing on the open market. Awareness is half the battle and once you are aware of the main property investment mistakes that people make and the things that you should be doing, then you’re firmly on the right track towards making solid investment decisions.
Research your Location
There are many reasons why investors make the mistake of not researching their location. Some only want to invest in property that is local to their own home but this is often not the most effective route. While it might seem like the easy option, there are plenty of other routes.
For example, many buy-to-let properties come with management agencies that do all the hard work and admin for you, making the distance between you and your property much less relevant.
It is essential to research a number of locations and seek expert advice on the best places to invest at the time. Otherwise, you risk missing out on some great opportunities.
When you’re researching your locations, always think about why you want to invest there and make sure that your emotions don’t overshadow the practicalities.
And think outside the box! Some of the most exciting property investment opportunities on the market right now are in locations that you might not think of right away.
Look for a mixture of Yield and Growth
Different types of property investment will offer different types of return that generally fall into two categories – property capital growth or rental yield. Neither one is better than the other; it’s about what is most important to you and the results you would like to see from your investments.
Do you want to see a quick return on investment, perhaps to support your children through university or fund your retirement? Or do you want to focus on property capital growth with a long-term buy and hold strategy? If so, how long do you want to stretch it over – five years, 10 years or more?
A property investment expert will help you drill it down to the finest details and identify those properties and locations that are likely to provide the greatest value in line with your investment goals.
Research the Developer
As with any industry, there are great developers who are reliable and communicative with a decent work ethic. Then there are those not-so-great developers that constantly push deadlines back, hire below par construction workers and other team members, and simply show a lack of commitment to completing the job on time (if at all ) and to the highest standard.
Your only concern should be choosing a strong investment, which means that you need the property to be completed to the highest quality on or before the deadline.
When you identify a decent opportunity, don’t be hasty. One of the most common property investment mistakes is rushing the process. Do your research on the developer, consider their past projects, ask for references and conduct due diligence to ensure you’ve covered all bases.
You cannot afford to take a gamble with your investments – and if you can afford to, then you still shouldn’t have to deal with a shoddy developer and below-par properties when your ultimate goal is to gain a high yield within a hassle-free process.
Diversify your Portfolio
If you’ve already invested in, for example, a buy to let property which has seen a fantastic yield, it will obviously be tempting to simply go for another buy-to-let in the same location with similar plus points. However, a strong portfolio is a diversified one so it pays to think more laterally.
If you already have one or more successful properties, you should capitalise on this success with a new type of property investment to complement your portfolio and deepen your understanding and position in the market.
At Alesco, we offer three very different types of property investment opportunity – buy to let, hotels and student accommodation. Each of these offers unique benefits and a range of opportunities depending on the current market climate.
Don’t be afraid of venturing out of your comfort zone into the wider property market – five years down the line when you’re boasting a healthy portfolio with a range of properties and expertise across different sectors, you’ll be glad you branched out.
Use a Recommended UK-based Solicitor
One of our clients’ most frequently asked questions is “Do I even need a solicitor?” The answer is a very firm yes. This is another of the most frequent property investment mistakes made. Investments are a serious matter with plenty of fine print that needs to be verified before you make any lasting decisions.
A solicitor will oversee the process in tandem with your Alesco representative to ensure that everything runs smoothly. He or she will also prove valuable as a major part of your support network to help you navigate the often-complex property market without any hiccups.
Our team of professional property investors offer advice on all aspects of property investment and provide access to market-leading products with the aim to minimise risk and maximise returns.