If you're planning on investing in property, it's important to have a plan. That plan needs to be tailored to your personal situation as well as the market conditions.
Your personal situation needs to take a few things into consideration:
- Your financial position - your deposit, your current earnings and your debt, these will all be major factors in determining your borrowing capacity.
- Your personal position - are you planning on buying one, maybe two investment properties or are you hoping to build a portfolio, how long do you plan on owning the property for, what are you hoping to gain from your investment?
- Your future plans - will there be any changes to your earning capacity any time soon (like a big promotion or a baby on the way).
Have a think about these things before you take the plunge. It's good to have some clarity around these issues and can help make or break a decision.
Market conditions need research. You need to take a look at the area you're hoping to invest in. Take a look at plans for investment in infrastructure, population growth and trends, supply and demand (for both sales and rental properties). These will all give you an indication of whether it's an area that is prime for capital growth and high rent returns.
Ideally, you're looking to invest in a "buyer's market", where the buyer has the majority of power rather than the seller - this occurs when there are more sellers than buyers - supply is greater than demand. This means you have more choice and better negotiating power.
Renowned property expert Michael Yardney has put together a list of 5 tips for investors to help you make the most of favourable market conditions. Take a look...
"Buyer’s markets are an opportune time for investors to start or build their property portfolios.
Typically, in a buyer’s market there will be more properties for sale, fewer buyers and values may have softened.
While these factors provide favourable market conditions for property investors, to fully leverage these benefits here are 5 tips you must remember.
- Secure finance pre-approval before starting your search for a property, Although there are generally fewer buyer’s in a buyer’s market, competition can remain tight in some segments of the property market or for some property types. By organising finance pre-approval, you’ll be in a much stronger position to beat any other buyers.
- Don’t necessarily jump at the first property you find. As stock levels increase in a buyer’s market, investors will inevitably have more choice. To help you secure the best deal, determine the type of property you want to acquire (i.e. development site, established house etc) and compare similar properties before making an offer on a property.
- Don’t rely on the whole market to rise. Never assume you’ll make a profit by simply acquiring a property in a buyer’s market and selling it during the next upswing. Make sure to complete sufficient research and purchase an investment property in an area that has strong growth fundamentals.
- If you’re ready to buy, don’t delay. Many investors, too often, sit on their hands and wait for the property market to start rising again. However, by that time investors would have missed out on capital gains and may have to pay more for a property.
- Weigh contracts in your favour. Property investors will have greater negotiation power in a buyer’s market, and should demand favourable contract terms and conditions, such as longer due diligence periods."
If we can help with the finance, please call, 07 3366 8604 or email firstname.lastname@example.org.
We can also refer you to a financial planner, investment property adviser or buyer's agent if you want specialist advice and support.
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