Property is a complex and competitive business, therefore it is essential that prospective investors equip themselves with the necessary skills before embarking on their investment journey.
There are seven skills that you need to be a successful property investor:
- Research and Market Analysis
- Property Management
- Financial Management
- Tenant Management
- Project Management
Each of these skills is essential in different stages of the investment process, from finding the right property through to managing tenants and maintaining the value of your asset.
Having a strong understanding of each key skill will help you make informed decisions throughout your investment career and maximise your chances to become successful investors.
1. Research and Market Analysis
Before you invest in any property, it’s important to do some research into what properties are available, how much they cost, and whether they meet your needs. This is known as market analysis. It can also be called Due Diligence.
The first thing that you need to do is to be able to identify very quickly if a property purchasing opportunity is a DEAL or NO DEAL.
When you start out this will take up a lot of your time and may in fact dissuade you from investigating lots of deals because you simply don’t have the time.
Market analysis involves gathering information about the local area and identifying properties that have potential to provide income.
This can be done by looking at current market trends and analysing historical data using sites such as Zoopla and RightMove.
It also includes researching what other people are doing in the same area, what rent is being charged and how similar properties are being marketed. This will allow you to identify which areas are performing well and where there may be room for improvement.
Negotiation is an important part of any transaction, whether buying or selling a house. And it’s a skill that will be used way beyond the initial purchase stage. For example, you might negotiate:
- Prices for renovation work
- Prices for property management
- Tenant agreement
- Marketing services
Negotiating is the process of discussing terms and conditions with another person in order to reach a mutually agreeable agreement. It can be a difficult task, but it’s important to get it right if you want to come out on top. There are a few key things to remember when negotiating:
1. Be prepared to compromise – No one likes to feel like they’re being forced into an agreement they don’t want, so be willing to offer up some concessions in order to get what you need.
2. Don’t be afraid to ask for help – If you find yourself struggling with the negotiations, don’t hesitate to ask for help from your friends or family members. They may have more experience than you and could provide some valuable insight into how best to approach the situation.
3. Be honest – If you make any false promises during negotiations, it could lead to serious problems down the line. Always be truthful and let your opponent know exactly what you’re offering and what you expect in return.
4. Keep calm – Negotiations can often turn heated, especially if both parties aren’t happy with the outcome. The last thing you want is to lose control over the situation and say something you’ll regret later. Stay calm and keep focused.
3. Property Management
Once you’ve found a suitable property, then comes the next step – property management. Managing the day-to-day running of the property while ensuring your tenant pays their rent on time and keeps everything clean and tidy.
There are many aspects to this job, including:
- Finding the right tenant
- Keeping track of payments
- Making sure repairs are made promptly
- Dealing with maintenance issues
- Handling disputes between landlord and tenant
- Maintaining good relationships with neighbours
If this isn’t an area you feel comfortable with then appointing a property management company to do them on your behalf could be money well spent.
4. Financial Management
When investing in property, it’s essential to manage your finances wisely. Whether you’re planning to buy a new home or renovate an existing one, managing your cash flow is vital.
Here are some tips to ensure that you stay within budget:
- Make sure you have a realistic budget for your property investment. This will help you stay within your allocated funds, and also ensure that you are not overspending on unnecessary features or repairs.
- Stick to a regular maintenance schedule. This will keep your property in good condition and minimise the need for costly repairs down the line.
- Be vigilant when it comes to insurance. Make sure you are up-to-date on all of your cover, as even small lapses can lead to large costs down the road.
- Use a property management company. These services can help ensure you keep the regular rental payments flowing and will handle tenants on your behalf who are not paying.
If you are struggling with financial management it’s often a good idea to speak to a financial advisor. They can be a huge help in keeping you organised, setting long term goals and helping you understand complex financial issues. If you’re not sure who to use I can recommend someone for you.
5. Tenant Management
After finding a suitable property, you’ll need to deal with potential tenants. This can include everything from assigning leases, collecting rent and issuing complaints to dealing with any problems that tenants may cause.
There are plenty of things to consider before letting someone move into your property. Here are a few key points to remember:
Screen applicants before accepting them as a tenant. Ask for references. Also, try to get recommendations from previous landlords.
Ensure that the applicant has sufficient income to pay the rent. Check their credit score and review their credit report.
Moving a tenant in is just the start of the management process. After all, you hope they will live, and pay you rent, in your property for many years to come.
Be sure to be responsive to any questions asked or issues raised. If there is a problem, don’t put off dealing with it, you’ll just make the tenant very frustrated and could be in breach of contract. If we get a tenant issue we deal with it immediately. The tenant is always very happy that we have jumped on their issue and sorted it out.
As with other skills, this is one that can be outsourced to a property management company. They can handle finding, screening, accepting, and ongoing management of tenants on your behalf.
6. Project Management
This might seem an unusual skill for a property investor, but it is an important one to have.
Project management is the process of planning, organising, leading and controlling the work of a team to achieve specific goals. It involves coordinating the activities of individuals and groups, setting clear objectives and ensuring that tasks are completed on time and within budget. A project manager must have excellent communication skills and be able to work well under pressure.
How does this apply to you? As property owners we often take on buildings that need some TLC. Perhaps they just need new wallpaper and carpets, or perhaps it needs to be fully gutted and renovated.
Either way, you’ll require the ability to plan, organise, and control the work being done. This could mean appointing a 3rd party to carry out the work, or it could be you doing most of the work yourself. Both cases require your involvement to achieve the goal of making a property ready to rent.
Property investment can be a very rewarding experience, but it requires patience and dedication. It can be tough to stick with a property project over the long term, but if you keep your focus on the goal and stay focused on what’s important, eventually you will see success.
When it comes to buying and renovating, some projects take months to finish while others can take years.
Then you need to find tenants, and then there is the long term; waiting to receive enough payments that your investment turns a profit.
Finally, you want to be patient and wait for the right time to eventually sell the property, hopefully for a very nice profit.
What are the benefits of being a successful property investor?
There are many benefits to being a successful property investor. Perhaps the most obvious benefit is that you can make a lot of money if you invest in the right properties and manage them well!
However, there are other benefits as well:
1) You will have more control over your financial future. When you are a successful property investor, you no longer have to rely on someone else to provide for your financial needs. Instead, you can create your own wealth and security through smart investment decisions.
2) You will have more freedom and flexibility in your life. As a property investor, you can choose where and when you want to live – and even how often you want to move! This level of freedom and flexibility is something many people dream of having but never achieve.
3) You will be less dependent on the economy. It’s no secret that the economy is unpredictable – it can go up or down at any time without warning! By becoming a successful property investor, you insulate yourself from some risks associated with an unstable economy.
What are the key factors to consider when investing in property?
When you’re investing in property, it’s important to take a number of things into account. Firstly, you need to have an investment plan and make sure that your financial goals are structured correctly. It’s also crucial to be consistent with your plan and ensure that you are on the right track.
Another key factor to consider is the market conditions. Are prices rising or falling? What’s the current economic climate like? How will this impact your investment?
It’s also important to think about worst-case scenarios and how you would deal with them. For example, what if the property market crashes? What if you can’t find a tenant? By thinking through these potential problems, you can prepare for them and reduce their impact on your investment. It’s important to have a contingency plan in place for any problems that might occur. Make sure you put your rental profits into a separate bank account so you have a pot of money to dip into.
As the saying goes, failure to prepare is preparing to fail. A financial advisor can be vital in these preparations. If you don’t have one I can recommend one for you.
To be a successful property investor, you need to have a wide range of skills. This article has explained 7 key skills that are vital to being a successful property investor. If you can master these skills, then you will be well on your way to becoming a successful property investor.