In thinking how to blog for the financial freedom for doctors site today, I thought an introduction to property investment may strike a chord. Don't forget that you always have the option of investing passively through Progressive Property...(Please excuse the aggressive marketing - it works for lesser mortals but not for us analysis paralysis freaks, but believe me, the product is worth it...)
Anyway, here are some tasters...
1. Don't read the papers!
You know how honest and truthful the media is in portraying GPs and the NHS! Why believe their assessment of the property market?
Newspapers are in one business - the business of selling papers. Television media are there to increase viewing figures. If there was no bad news, papers wouldn't sell and folks wouldn't bother to watch the news so often - I know that I was glued to the television after the events of 9/11 and during the foot and mouth crisis! Don't believe everything they tell you! There are other ways to perform your due diligence!
2. Take one step.
You can procrastinate all you like - meanwhile, other peoples' property will have appreciated in value! Professionals like us are particularly subject to "analysis paralysis" - we have been taught to analyse every scrap of evidence that we can get our hands on. It has been drummed into us. To take any step without doing so goes against the grain - it feels wrong, and risky. But analysis paralysis doesn't make you rich...and risk aversion won't make you into a millionaire (don't forget, you're nearly there - in dollars a million is only £700,000 - how much is YOUR house worth?)
3. Get to know an area well.
If you are thinking of buying into property (unless you plan to do so passively...) - get to know your chosen area really, really well. Jog, cycle or walk the dog in the area every day. Get to know one square mile infinitely. Know which properties came up for sale and how much they make. Know how much local rental is. Spot the planners applications. Notice any scaffolding. Know it well so that you spot before anyone else when something is below market value (BMV) as this is the fundamental step to making money from property.
4. Talk to letting agents.
Go into the letting agents in your chosen area. Ask them the question - "If I were to offer you a property that you could let out right now, what would it be?" Find out what is letting locally. Find out market rents, and any local trends. Get them on your side, part of your network, quickly.
5. Establish a network.
Get to know property investors, mortgage brokers, estate agents, letting agents locally. Establish a wealth network. Networking is how you get (and give) good deals. Enjoy talking to them!
6. Look out for BMV (below market value) deals.
Some people who may be looking to sell at below market values include:
Banks after repossession
Householders before repossession
Families after bereavement
The elderly when they are planning to go into care or warden controlled accommodation
Couples going through relationship breakups.
If you can offer people a quick sale with no housing ladder, you will be doing them a service. Help them (and yourself) out.
7. Rid yourself of negative beliefs around money.
This was a tricky one for me! I grew up with the traditional Christian ethos that money is bad and we don't want to be rich. Working my way through the 101 financial tips and Nicola Cairncross's book has helped me no end. All the while that you feel that you don't deserve to have money (and in my experience we females are more prone to this than the guys) you will do something, usually subconsciously, to prevent you from doing so. I will be focussing on this in a future blog post!
8. Put the rent up every year.
Be business-like about this. If you aren't pro-active on this count, you will be losing money. Put it up by a small amount, enough to keep you in business, and you won't go far wrong. Sure, there is a problem if rents all around you are actually falling, and you need to keep an eye on the market, but don't forget how much it costs nowadays to move house!
9. Respond promptly to queries.
If you have made an effort to trace BMV deals, you must follow up every lead. Work to establish yourself as a reliable individual, who the agencies can rely on. As a landlord, respond to information about problems - or ensure that your agent, if you use one, does so. Work to keep your tenants - they are important to you.
10. If you are doing up your own buy to let property, don't do it up to your own standards.
Don't choose that luxury and very expensive bathroom that you have always wanted - you need reliable but inexpensive fixtures and fittings in your B2L property. Don't forget that few tenants look after property as well as if they owned it, and you may well be replacing it more frequently than you would in your own home.
I hope that this is a useful taster for all you budding property investors - food for thought for starters!
KR
Alison
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