Gallus Property Tips for a Profitable Investment
Researching investment properties on behalf of our clients and our own portfolio is a key part of Gallus Property. Here are our top tips for a profitable investment:
Research the Area
This one is quite obvious but essential – Prior to beginning your investment search, you should carefully consider which areas to focus on. Try and consider the market that the property will appeal to, if it’s a house does it have a nearby school? Near a University or College for students? If you plan to rent it out or sell it your priorities may change so think carefully about who would live in that area and why your investment property would appeal to them
Research the nearby sales and rental prices and consider how your investment property will fare in that market, needless to say you should use conservative figures in calculations
Talk to Local Agents
Before committing to an investment it’s very important to speak to local agents to find out what the rental or sales valuation will be, especially if you plan on doing a programme of refurbishment when purchased. Consider using a specialist company like Gallus Property for a hands-off investment strategy – A Local and experienced investor could save you time and money and help you avoid the pitfalls of a bad purchase
Have a back-up Plan and Exit Strategy
As ever the market can change and if you plan on flipping a property by refurbishing you may want to make sure that you have a good plan if it doesn’t sell. If you have purchased in a strong sales and rental area then your investment will be safe. Just make sure you have an exit plan so that you can always re-sell or rent the property. Calculate the worst-case scenario of what could happen – Doesn’t sell, low rental figure, market becomes sluggish.
Consider Financing and Budgeting Options
Prior to purchase you will need to think carefully about finance. Consider talking to a financial advisor who can arrange mortgages and if buying a run-down property then bridging finance. Depending on the circumstances you may wish to re-finance the property after refurbishments are complete to move on to the next project, just make sure that your valuations and calculations will match up.
Prior to purchasing a budget should be prepared for any works that are required prior to renting or selling, this is important to calculate what your total spend is. If you are not familiar with refurbishments then try and get local and trusted tradesmen to provide quotes prior to purchase
Appraise the Property
When looking for the investment property study the Home Reports closely and ensure there is a ‘Mortgage Valuation Certificate’, if there is not one then proceed with extreme caution – Often the Home Reports without one are not worth the paper they are written on. Most commonly this happens with auction properties (which should be avoided unless a savvy and experienced investor)
Be very cautious of some issues which may become expensive and render the property unprofitable – Problems with communal roofs, expensive factors fees due to building issues, damp and structural problems. If they have a ‘2’ or ‘3’ on the Home Report then you will need to factor this into the purchase price to repair. Just beware that some of these problems can be long standing and expensive to repair
As with any investment if you make critical mistakes your investment can become costly and unprofitable. Use caution and think logically – The numbers and the risk must all stack up. A cautious investment is better than a risky one. Do not get overly excited and make an offer that you will regret