Getting started in property investment can be a really daunting process and knowing what you need to get started can be a God-send. So, to help you get off to a flying start we thought we would share some helpful tips and key tools with you.
1. Your ‘Why Me’ List
“The man who thinks he can and the man who thinks he can’t are both usually right” – Confucius
The first thing you need to do before you can start investing in property is to get your mind in the right place. There are no quick fixes to success, and this is going to be a long journey, so knowing why you are going to win before you start is worth spending some time on!
To help differentiate yourself from other potential buyers, you need to create a list of reasons why you are going to win against all the other potential buyers. By having a clear understanding of why you are the best placed to help the seller and the agent, you will be able to confidently sell yourself to agents as the best buyer when making offers on properties. Eventually you want to be in a position where they call you first when they have a great property to sell.
2. An Area Map
Okay, so you’ve made your list and are ready start looking for your investment property. Getting a map of the city in which you want to invest in, is probably the best money you will ever spend.
This will enable you to mark out the different areas in the city and the key amenities that prospective tenants will look for in those areas when looking for a property to rent. Amenities such as train and bus lines and stations, major roads, schools, hospitals, sporting venues, leisure centres and parks. It is also a good idea to see who the estate agents are and where there are located because you will need to build a relationship with these agents in order to get the best deals.
A key tip is to take your map to the local estate agent and get someone to tell you about the city – you’ll be surprised at how much useful knowledge they have!
3. A Viewings Checklist
Once you’ve found your areas and are ready to view some properties, a viewings checklist is a great tool to ensure that you don’t miss anything in or outside the property. It helps to focus your limited time to the items that need work and helps to ensure that you are viewing each property with the same lense so you can compare them later.
A key tip here is to include some questions to ask the agent on the viewing, such as “why is the owner selling the property?” and “what price are they willing to accept?”. If you do enough viewings, you will build a relationship with the agent and be surprised at how much information they can let slip.
4. Your Refurb Pricing Matrix
This tool helps you to understand what kind of price it is going to cost to refurbish the properties you have viewed. This is beneficial so that you can take this cost into account when making your offer and be able to calculate just how much the property is actually worth.
But how do you fill out your pricing matrix? Well, a top tip if you are new to property investing, is to get a couple of builders to come and view the properties with you and give you an itemised breakdown of the cost to refurbish. You may have to pay for the builder’s time, but over time, you will be able to build up an idea of how much things actually cost to fix and complete your Refurb Pricing Matrix. Another tip is to ask for a breakdown of labour and materials as this will often work out cheaper than a per-item quote.
5. Your Purchase Documents
In order to agree a sale, you will need to have certain documents certified and to hand. The rules around which documents vary by agent, but typically you need to have, for each purchaser:
1. Proof of ID – Passport copy or Driving License
2. Proof of Address – Bank statement or Utility bill
3. Proof of Funds – Bank statement showing deposit funds
4. Mortgage Decision in Principle – From the mortgage lender/broker
5. Proof of Company Registration – Registration number and bank account (if required)
These documents also helps to show agents that you are serious about purchasing a property and not just ‘looking around’ and will help them convince the vendor to accept your offer.
Top tip here is to remember that agents only get paid when the purchase completes, so they need to agree a sale and then get it to completion of purchase. If you can show them that you are serious, you will be surprised at how much help they can give to you.
6. An Offer Tracker
Using a spreadsheet, you can track all the properties you have viewed, along with key information such as purchase price, refurb cost, the estate agent’s details etc. It is also useful to track your offer price and date so you know when to follow up.
Some top tips for you when it comes to putting in offers:
1. Be systematic with your offers – it is a numbers game, i.e. the more offers you put in the more sales you will be able to agree.
2. It’s all about the follow up – over time, people’s circumstances change so don’t be disheartened if the vendor rejects your first offer. Always follow up with the agent a few weeks later and keep a track of the properties that you missed out on in case the sale falls through.
We really hope this beginner’s checklist helps you get started on your investment journey.
Remember, the aim of the game is to build a relationship with the agent so that when they get a good property through, they automatically think to call you and push the vendor to sell the property to you.
If you have any questions, please feel free to get in touch. We would love to help!