As with all major life decisions, investing in property is one which needs to be thought through step by step, making sure all the bases are covered. We at Silks like to offer our investors our expertise, not just in finding investment properties but also in ensuring our investors have a strategy in place to achieve financial freedom. Contact us for more information on how we can help.
Understanding why a person invests in property helps to create personalised objectives which suits each individuals needs. Not everyone sets out to become a property investor. Accidental investors/landlords tend to happen when a person is unable to sell a property so resorts to renting it out or when a property is inherited. Establishing the why behind renting out a property helps ensure the most suitable objectives are set.
Setting your objectives
Regardless of how a property is obtained, the main focus when it comes to setting objectives is relatively the same in all situations:
What is the reason behind the property investment? – is it to achieve financial freedom? Or to generate a large sum of cash for another purpose? Setting a goal early on in the process provides a sense of direction, motivation and focus. Investing in property isn’t something which is going to happen overnight. It requires time, dedication and persistence in order to get things done right and achieve goals. This brings us to the next point.
How long should the investment be made for? If its to generate a large sum of money then at what point does the property get sold? At what point does the investor achieve their financial freedom. And once they’ve done so, do they still keep the property?
How is the investment going to be funded? Will be though a mortgage, cash payment or both? If it’s a mortgage, how much of a deposit can be put down to secure the investment and how many years would the mortgage last for? Will the rental amount be enough to pay the monthly mortgage rate?
Investment Budget – possibly the most important one. How much is the investor planning on spending towards the investment. If its just for rental purposes then how much return is expected? If its to renovate and then sell, how much of the cost is to be put towards the actual investment and what would be the budget for the renovation costs?
Finally, the level of return on the investment. A good property investment should bring an investor a minimum of 8% rental yields. However, some investors may opt for a lower or higher return on their investment. The level of return will depend on the size of the investment and the property type. Whatever the targeted level of return, its always a good idea to keep it in mind when looking for that investment property.
So use this chance to create a goal and a list of objectives showing how to achieve that goal. Even if you’ve already invested in property before, it’s not too late. Consider your options and see what you can create as part of your personalised investment plan.
As part of our services to our landlords and investors, we can help you define your property investment objectives. Contact us today to arrange a free property consultation.