Before you attempt to build your property investment business you should decide which property investment strategy is best for you. There are many different strategies that you can adopt and hear are a few examples:
- You could purchase undervalued property at auctions and then sell these on the open market
- You could be the master of finding and reselling repossessed properties
- You could become a multi-let or house of multiple occupancy (HMO) specialist
- You could find motivated sellers and agree to purchase their properties directly and then resell.
- You could be a property developer who buys properties, adds value to them and then resells them
If you want to be successful then it is a good idea to choose one of the above and become really good at that particular strategy. You may end up combining two strategies together. But whatever you do don’t try and flit between them all or you will spread yourself too thin.
Here are some general rules to follow for a good property building portfolio:
Make A Good First Investment
You have to start somewhere so make it a really good start. If you want to build a portfolio of 10, 20 or even 100 properties it all starts with the first one. You will probably find that it is the hardest, and that all subsequent deals will be a lot easier.
It is best to start small and go local to minimize risk and errors of judgment.
Buy Low Sell High
The real secret to successfully building a property portfolio is to buy low and sell high. There are many opportunities to do this and every month properties are being sold for less than they are worth for a number of reasons.
This is very important as you want to get a good return on your investment. Just be bold here and make low offers for properties and you will be sure to find some winners.
If you have chosen the buy to let strategy then look for properties that have positive cash flow already. This will provide you with the leverage and equity that you will require to invest in similar properties.
Don’t Buy On Emotion – Think Ahead
Don’t worry about how you feel towards a property, it is the scope that it offers that is the most important thing. Use your imagination to visualize how the property could look in the future. By doing this you will be able to find several properties below their market price ripe for development.
Is The Time Right?
The property market is cyclic so take this into consideration. It is not the best idea to buy properties at the height of a boom as the time to see a return could be very long. Instead, look for properties in a market which has floored but are starting to rise in value.
Keep Your Financial Broker Happy
To build a strong property portfolio you will need a good financial broker and will need to keep them happy. They are critical to your success, so make sure that they are experienced and reliable. Using a broker is a good idea as they can find you the best deals.
Know The Market
You need to know all about the area you intend to work in so that you can quickly spot good opportunities to purchase properties. You do not want to buy the right house in the wrong area. Be prepared to bid on several properties at a time to ensure finding one that will meet your investment goals.