Purchasing property is an investment strategy that has the potential to be quite the lucrative and consistent earner, but as with any long-term investment path, you need to be sure about the prospects for the future and what you’re getting yourself into before you go ahead and put your money in.
Want to find out more about how to establish yourself a solid property portfolio? Here are five essential tools that you might decide to equip yourself with on your journey to financial freedom.
1. A Watertight Property Plan and Savings Strategy
Forming the basis of any solid financial strategy, a well-thought-out and detailed plan might sound like a boring way to start, and it probably is. However, it’s a necessary step that will help you along the way and stop you from making decisions that are a hindrance rather than a help to your overall financial goal. This doesn’t mean that your plans have to stay the exact same as time goes by, and, naturally, they might change depending on any altering financial situations you might find yourself in (or if your personal situations shift), but it’s extremely helpful to have these guidelines in place.
2. The Right Asset Class (Property Type)
To begin with the best chances of gaining fruitful returns on your investment, the type of property you go with is also important. This will differ depending on factors such as your budget and what sort of property you think would suit you as an investor and your target tenant. Either way, you should pay attention to the rental yields, which determine how much money you stand to make on a regular basis from the tenant, and capital growth, which determines how quickly the property will increase in value.
Some of the best properties available on the investment market at the minute are purpose-built student accommodation. Not only is this apartment type popular with the increasing number of students going to university worldwide, but investors can benefit from the cities that they are usually centred in the heart of, since these are typically more affordable for beginners. In the UK, student property is one of the highest-performing asset classes, bringing in a consistent income to investors from rent – typically paid in advance by students living away from home during term time.
3. Knowledge on the Market
Making sure you’re educated on the property market before investing should be high on your list of priorities. No one can make your investment decisions for you, so you should make informed ones! Luckily, there are a ton of different online resources, guides, and videos on the internet that are completely free to help you get started. RWinvest, for example, has beginners’ buy-to-let guides, guides to off-plan property investment, and even articles on things like the political effects of Brexit on the property market.
Alternatively, if you want to ask about a specific aspect of the property market or a particular area that you feel passionate about, you could contact an experienced advisor directly.
4. Different Asset Classes Entirely
If you’ve bought your first property (or have just generally bought before) and want to expand your portfolio even further, you might want to consider investing in something different, as this will help to diversify your assets and better protect them against a shifting market. If you have a residential, larger property in one city and a bespoke student apartment in another city, for example, not only will you benefit from the growth in both areas financially, but you’ll also not lose out if one of the areas doesn’t pan out to be as successful as you’d hoped.
5. Investment Foresight
Many speak about the power of hindsight being a wonderful thing, but it won’t help you very much in the world of investment. One of the most important and crucial skills to train yourself up on, again aside from being knowledgeable on the market currently, is which areas are set to grow in the future and where it might be best to try and root yourself going forward. Areas with a lot of ongoing regeneration can be exciting, as you can sometimes get early access to an upcoming development or project before it has exploded.
Property investment, perhaps more so than many other investment strategies, is a long-term commitment, and so you need to make sure as best as you can that the area you’re looking at is sustainable and not set to dip in the coming years.