Like so many areas of investment, we only tend to hear about the successful property strategies with many preferring to “bury their dead at night”. We all do it; we all focus on the good times and the good returns while putting the disappointing investments to the back of our minds. So, when you strip away the emotion and focus on success how does somebody get into property for the first time?
There is no shortcut to property investment success
Whether you are look at technology, stock market investment or property investment, there are no shortcuts to success. It is no coincidence that the more successful investors are those who take a long-term approach, hold their nerve in the good times and the bad times and remain focused on their long-term goals. While there may be opportunities to take a short-term profit on property investment, movements tend to be gradual and rental income is an important element of the overall picture.
Do not overstretch your finances
Just as mortgage companies are unlikely to offer 100% funding on a property acquisition, preferring to leave headroom in the event of unforeseen circumstances, investors should take the same approach to property investment finance. If you invest all of your funds and maximise your mortgage exposure, what happens if one of your properties needs repairs or perhaps there are no tenants for a couple of months? If you have overstretched your finances, even a slight dip in income/increase in expenditure could send your property portfolio into a downward spiral as we have seen many times in the past. By all means be adventurous, be imaginative but be sensible.
Never stop learning
Property investment is not unique in the fact that you should never stop learning. The investment markets are littered with individuals and companies who thought they “knew better than the market” and eventually crashed and burned. Trends change, strategies change and you will be presented with an array of different investment opportunities over the years. While many would suggest focusing on areas in which you have intimate knowledge there is an argument for expanding your knowledge base to create a better grounding.
Whatever you choose, the moment you stop learning is the moment that your investments are at risk. There are a number of property investment courses available today such as the One Day Property Mastermind Foundation Course and the Three Day Mastermind Accelerator Course.
Keep up-to-date with regulations
In years gone by property ownership, buy to let and property investment regulations were fairly straightforward and often remained static. In recent years we have seen a major shift in government attitude towards property regulations with private landlords seeing a significant increase in their regulatory burden and their tax liabilities. It is therefore imperative that you keep up-to-date with the latest regulations, such as the Homes (Fitness) Act and ensure that your investment model is still profitable and worthwhile.
Even after the recent tax and regulatory changes it is still possible to make a good return in the longer term with property investment. However, you may need to adjust your assets, refocus your investment strategies and run a tight ship with regards to non-regulatory and non-tax based costs.
Short-term property price movements are unpredictable
Property markets can often be difficult to read in the short term. If we take the UK property market since the 2016 Brexit referendum for example, experts have been talking about a collapse. It is fair to say we have seen a slowdown in growth, with London property prices falling in actual terms, but a collapse, no signs just yet. However, this has not stopped the so-called experts from continually predicting a fall in property prices, often creating a scenario where a self-fulfilling prophecy may come true. Yes, we will then have all of the “we told you so” comments.
Then again, the Brexit debacle would appear to be hitting rock bottom with regards to the actions of MPs, the response of the European Union and the utter confusion about how and when the UK will leave. Indeed there is even a suggestion that Brexit could be cancelled and article 50 revoked. So, if we are potentially at the bottom of the Brexit preparation cycle, when all nightmare scenarios have been discussed and considered, you could surely argue that property prices have bottomed out?
If, in theory, the situation can get no worse than the worst of current expectations, then you could argue UK property is looking good value in the longer term? The reality is nobody knows how property prices will move in the short term; there are many different scenarios but nothing definitive. So, if we focus on the long term, the UK population will continue to grow, the UK economy will learn to accommodate the changing landscape and we will eventually agree a deal with the European Union. In the short term, there is concern, uncertainty and unpredictability but the long term picture is still positive.
Perhaps, we may look back on the uncertainty surrounding Brexit as a strong buying opportunity in the longer term? An opportunity many of us may have missed due to the short term mist clouding the long term picture - are we not seeing the woods for the trees?