Five points to consider to make 2015 your best investment year yet.
Most of us will more than likely be setting New Year resolutions in all aspects of life, and property investment is no different when setting goals. Setting ambitious but realistic targets is vital and they certainly can be reached, as long as you break down the steps you need to take to ensure that goal is met, and you get the results you desire.
You can ensure that you have the best chance of making 2015 your most successful year for property yet, by following these simple planning and goal setting strategies!
Have a clear strategy and do your due diligence: Not doing your homework can cost you a lot of money when investing in property. The property market can change which you sometimes may not be able to predict when. You need to make sure from the start that you are investing in property for the right reasons for you, and that your strategy is best suited to your individual circumstances. This decision will be dependent upon many things such as knowing your investment area well and knowing exactly what type of tenant you are looking for. Having a clear strategy before purchasing a property can make the difference between making a minimal return, and making huge returns on investments (ROI) each month. It is also vital to make sure that you stick to one strategy to begin with, and avoid getting distracted by other ‘opportunities’ outside of your plan, until this is systemised and working how you want it to.
Set regular reviews for your property portfolio: You should always treat your investments like a business and regularly review the performance of your properties. This will allow you to see if any improvements or upgrades need to be made on your properties, other than any issues the tenants have made you aware of. Also, by looking after the property and keeping your tenants happy, it gives a better chance of them staying long-term, which is an important part of your portfolio’s return on investment each month. You should also regularly check that you are receiving the best rent, and currently on the most appropriate mortgage rate for your properties. You can do this by contacting a qualified financial advisor for mortgage rates available, or local letting agents for market rents.
Set realistic time scales for each project: The amount of time you spend on each aspect of your property investment is also key. You need to keep in mind that everything can often cost more and take longer than you originally perceived. It has been suggested that you should be prepared to spend double on your costs and triple your time on any project. If you can account for any problems that may arise, you can then give yourself a contingency period to complete certain tasks should you need it. You should also keep in mind any other projects you are currently involved in when taking on new property opportunities.
Have a system in place for managing your costs: Managing your costs correctly is always a big deal when investing in property, and knowing exactly what income is coming in from each property on a monthly basis is key. This will allow you to forecast your profits moving forward. Something that I have always done is factor 10% of the rent taken from each property each month, as an incidental fund. The 10% has typically covered any day-to-day maintenance, repairs or safety checks a property needs, and is a buffer that I can use if needed.
Always be prepared to diversify and change if needed: The property market is forever changing and what worked yesterday might not necessarily work today. I believe that the key fundamentals are always very important whatever strategy you are using, and there are many strategies available to use in property investment. The key I have found is to be flexible where needed and diversify to another strategy if the one you are using is not currently working as well as you would like. You can do this by keeping up to date with the latest strategies available, and review your plan and strategy from there, should you need to.
- Peter Iwaniszewski