6-point property investment checklist for beginner investors

Building confidence for your first property investment

Property investment could be a life-changing strategy. A simple property investment strategy could help you retire early. You’ve heard of the property millionaires. Every one of them started as a beginner investor. That first property investment will probably be the biggest single purchase you’ve ever made. It’s natural to have a few worries. It’s a big decision. Like getting married. Your nerves will jangle.

You’ll have a lot of questions buzzing around your head, and those sensationalist headlines about property investment don’t do anything to calm those nerves. The first thing to remember is that all successful property investors suffer with their nerves. Providing you get some investment education, do your due diligence, and buy in the best places to invest in property UK, you could have the same success as all the property millionaires before you.

One of the secrets to making that first successful property investment (and all that follow) is to invest with confidence. I’ve always found that my property investment checklist makes sure that I invest with confidence every time. Here are the steps I take:

1.      Understand the process of buying a property

Before you invest, understand how to invest. Here, I’m talking about the process of buying the type of property in which you plan to invest. The process of buying off-plan property is different to buying established property. Hotel room investment is different to investing in student accommodation. So, understand the process of buying the investment property you want to purchase before you sign on the dotted line.

2.      Do your property research

First off, do your property research and buy in the best location. Invest where property fundamentals are strongest (shops, schools, transport links, major employers and major investment) and will drive demand for your investment property (from tenants and buyers) today and in the future.

3.      Make sure the numbers add up

Make your cash flow projections, and work out your income and outgoings. Be conservative when you do so, providing a cushion for your finances. Overestimate your mortgage rate by 1%. Even if you are buying new build with full structural insurance and all new appliances, allow for 10% of the rental income to pay for maintenance. Don’t forget to allow for void periods: a month a year is a good length of time.

4.      Think about taxes

There will be taxes to pay when you invest. Stamp duty land tax is payable on the purchase price. The amount of income tax you pay will depend upon your rental income, deductions you can make, and your personal tax position. When you sell the property, there could be a liability to capital gains tax. During void periods, you’ll still have to pay council tax.

One word of warning about property tax: if you’re investing for tax benefits, forget it! Invest because you want to increase your wealth and income, to make a difference to your lifestyle.

5.      Get your financing lined up

You’ll probably need to finance your investment with a buy-to-let mortgage. There are different rules in the buy-to-let mortgage market than in the ordinary home loan market. Many lenders don’t operate in this specialised segment. Work with a mortgage broker who is experienced in the buy-to-let market and the type of property you are buying.

6.      Consider the property inspection

Whether you’re buying off-plan, new build, or existing property, you’ll need to conduct a property inspection. Are you the best person to do this? I would never look under the bonnet of my car and try to diagnose problems. At least not on my own. I’d have a qualified mechanic with me.

When you inspect a property before completion, have someone with you who knows about property. Make a list of all the things that need putting right. If the developer will do all the work (on off-plan and new build they should), present them with your snagging list. If you are buying existing property, use your list as a basis for negotiation on the price.

Remember that property investment is a long game

Property investment is not a ‘get rich quick’ scheme. If you try to flip properties, you are more likely to make a loss. Instead, invest with a long-term view. Be conservative with your numbers, and diligent with your research. Get educated, and benefit from working with professionals like mortgage brokers and property experts.

There’s no reason why you shouldn’t make a successful first property investment, and then kick on from there and build the wealth to achieve your lifestyle goals. Contact one of our team today on +44 (0)207 923 6100, and take the first step to joining the property millionaires.

Live with passion

Brett Alegre-Wood

Brett Alegre-Wood
May 19, 2017

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