Property Investors Warned To Choose Potential
Property Purchases Wisely
Savvy property investors know that profit is made when buying property, not when it is sold, as equity can be locked in upon purchasing below market value, giving the property investor greater control of the purchase price by negotiating a deal with the seller, (vendor), rather than what the property eventually sells for on the open market.
Property investors are different from ordinary residential property buyers, as they are of the mindset that the property should meet all the financial requirements of a landlord first & foremost, rather than paying the high end retail price for a property just because it looks nice.
Many new and amateur property investors make the common mistake of falling in love with a property and begin to let their heart rule their head, becoming so emotionally involved that they lose control of their finances and let their emotions win, overspending massively and reducing any potential yield.It is vital that property investors buy well in the first place, because if you start your property investment journey in the wrong place, the rest of the mathematics that need to be in place to validate this transaction will not stack up.
If the price of a property is too high, and you are unable to negotiate a discounted price with the vendor, then the right thing to do is walk away, there will always be another property investment opportunity around the corner.
The amateur property investor often wrongly thinks that if they pay over the odds for a property then they should get a better property, although this is not necessarily true, paying more lowers the potential rental yield that investors could expect as a return.
New and novice, property investors do not understand how market forces work and expect the UK housing market, which is an average of many property transactions and property prices, to change its tune in order to meet them at their now inappropriate level of return (yield) that they expect, simply because they paid too much for the property, it doesn’t work like that.
If a property investor is not sure on the potential rental levels for a given location, then they need to conduct thorough due diligence on their chosen investment area and a few calls to different letting agencies within their area should allow them to determine if the area has a good reputation and what the maximum price is that they should be paying for a property in that area, and of course, the rental potential of their chosen property type.
There is little point in buying a property where no tenant demand exists.
Property investors should always check out the property’s, most important and expensive features before making a purchase, such as the central heating boiler, windows, electrics and plumbing. Remember if you buy a problem then you will own the problem and it will be up to you as the property owner to fix that problem, regardless of cost, lowering the potential rental yield!
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