3 important questions for a first-time property investor to ask

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The most important asset required in order to invest in a property is the obvious answer (money!) but rather the will to do so. I’ve spoken with hundreds of procrastinating investors who have the funds to invest with but never actually do it. On the other hand, I’ve encountered several would-be investors who don’t have the money but through months of stringent saving eventually build up their deposit so they’re able to invest for the first time.

Before they do however, there are some important questions to consider before parting with any of your money. In today’s article, I will outline these questions that you should be asking as a first-time property investor.

What do I want to achieve as an investor?

Again, the simple answer is “making money”, but there are a variety of ways in which to achieve that as a property investor. Your money may be made through renting out your property over the long-term and making a regular, sustainable income that way. Or you may choose to buy and sell relatively quickly in order to make short term capital gains.

The Tarquin Jones’ ethos is to buy new build property in an up-and-coming area, rent it out over the long-term in order to earn an income, and then selling it years down the line once the area you’ve bought in has improved and raised the price of your property.

In order to achieve this, you will need to do your due diligence beforehand regarding the area you’re considering investing in and some number crunching to make sure your returns and resell value will be sufficiently rewarding for yourself.

Do I want to manage my property myself?

In my experience of speaking to first-time investors, many will naturally be looking for an investment close to where they live because they’re under the impression they need to be in order to manage it. This doesn’t have to be the case- in fact, many buy to let investors that I know have never even seen some of the properties they own because they live safe in the knowledge it’s earning them a regular income.

They are able to do this because they have employed an experienced lettings company in the vicinity of the property to handle everything from finding an appropriate tenant, ensuring they pay rent every month and dealing with any repairs or maintenance issues. This will all be in exchange for a small percentage of your total income (around 10% is common) but many landlords are more than willing to pay this for the removal of stress it provides.

However, if you want to manage everything yourself, you will need to deal with all of this yourself which is akin to a full-time job in terms of managing the upkeep of your property. Many investors don’t have the time, effort and means to combine all of this with family and work commitments. Because of this, I would recommend the hands-off approach when it comes to property investment, although a hands-on role can be profitable providing you have the time and dedication for it.

What are my expenses?

Plenty of different factors can change the property market. A change of government, an increase or decrease in interest rates, a large company moving into an area, and new infrastructure build are just a sprinkling of things that can affect property prices and rental income.

We recommend calculating your cash flow numbers on a two-year basis and revisit every year. When considering costs, remember to include the following:

  • Mortgage costs
  • Property management fees
  • Insurances
  • Maintenance and repairs

You should also make an allowance for void periods. You can do a back-of-an-envelope calculation as a first estimate, but you’ll need to assess more accurately before proceeding.

These are some of the key questions to ask yourself before you enter the world of property investment. By taking these into account, you will be doing your due diligence in terms of what you want to get out of your property investment.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.


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