Thoughts Before Investing

December 1, 2020 3:21 pm

By investing in property you can opt to gain a quick return on your investment or achieve a set monthly income from your properties. Whichever you choose, there are considerations to make before committing to a deal even crosses your mind.

Whether this is your first investment or you are adding to your already existing portfolio you must determine whether this property will meet your objectives or not.


Supply and Demand



Much like businesses, supply and demand has effects on your investment success. This means it is imperative that you carry out due diligence to determine the demand for your investment type - Buy-to-Let, Flips etc - in a certain area.

It’s important to consider whether certain properties would perform well under a particular investment strategy before committing to the purchase.


Adding Value



The common theme within the strategies our investors follow is they each aim to add value to the properties they purchase, securing a return on investment.

Adding value to a property usually consists of renovating particular parts of the property to improve their standard or appeal. This means one of your key considerations is determining how you can add value to a property.

The best property renovation projects come from property conversions. By investing in a property with potential for a conversion you increase your opportunity to add value. A conversion that adds an extra room or opens up an existing room can bring your end value up by quite a large margin.


EXAMPLE



We recently sourced a property in the south side of Glasgow for an investor who had the goal of adding a flip property to their portfolio.

This property was a ground floor, 1 bedroom apartment which came with the opportunity to be converted into a 2 bedroom apartment - and of course we took this opportunity.

We transformed this apartment by converting the kitchen into a second bedroom and renovating the living room into an open plan kitchen - living room.

We then took this property a step further by adding an ensuite bathroom to the master bedroom.

This increased the property value by approximately £50K.




Tenant



Conversions are a fantastic way to add value to your property, however, not all grand plans may be worthwhile.

It’s important that when considering a conversion you think of the bigger picture. Take your strategy into account.


- Do your conversion plans align with your overall strategy and objectives?

- Would these changes appeal to your potential tenants?


Renovations are costly, therefore, take careful contemplation before proceeding. While implementing changes may improve the property you must compare these against surrounding properties and the local market. It is important that your plans don’t differ too drastically from surrounding properties.


Profit



Let’s be honest, everyone shares at least one investment goal - making a profit. This is why it is imperative that you do your own due diligence and consider every detail carefully before diving into decisions.

Let’s be honest, everyone shares at least one investment goal - making a profit. This is why it is imperative that you do your own due diligence and consider every detail carefully before diving into decisions.

Let’s be honest, everyone shares at least one investment goal - making a profit. This is why it is imperative that you do your own due diligence and consider every detail carefully before diving into decisions.

Surrounding properties and their condition can also affect your property value. If properties in the area of your investment property are in good condition your opportunities for rental or sale are increased.


Finances



As we have discussed, property investment is a commitment that takes a lot of thought and decision making to ensure you secure the right property.

When making a property investment commitment it is crucial that you guarantee the funds to see the investment through from start to finish. Meanwhile, after securing finances to fund your investment it is useful to allocate part of your budget for unexpected expenses. Property investing can be a huge project, therefore, by allocating a fraction of your budget to unexpected expenses you will ensure you have covered yourself for unfortunate events.


Goals





Your objectives are what will drive your property investment and keep your project on track. By opting for a property that meets your investment goals you will feel encouraged to progress with your project.

Follow a well structured plan to ensure you remain on track regarding your property investment. This will enable you to meet your objectives and ensure the smooth running of your project, increasing the likelihood of success.


Risk



Like everything in life, property investing comes with risks, but by being aware of the risks you allow yourself to be one step ahead.

Research and due diligence will highlight to you what to avoid during your property investment. This reduces the chance of detrimental risks within your project.

It’s all about pros and cons. Sometimes, risk taking is worthwhile and helps us move forward, so ensure you don’t shy away from all risks. Weigh up your risk and rewards and this will determine whether the risk is worthwhile to your project.


Conclusion



Property investment requires lengthy due diligence and careful planning and consideration throughout the whole process.

There are many points to determine before moving forward with each decision. By researching the market and assessing areas for potential investment you will equip yourself with the appropriate knowledge needed to commit to an investment deal.

There are many points to determine before moving forward with each decision. By researching the market and assessing areas for potential investment you will equip yourself with the appropriate knowledge needed to commit to an investment deal.

Risk is expected, however, by carrying out research and due diligence you will be able to make an educated investment, lowering the risk involved.

    Leave a Reply

    Your email address will not be published. Required fields are marked *



    Book a Discovery Call

    Get a free 30 minute call with one of our knowledgable property specialists to find out how you can maximise your property investments today.

    Call Today