Getting started by investing in property
If you like the idea of investing in property and you want to use it to change your life, you may be asking what your next steps should be? With many considerations when starting out as a property investor, your success will be dependent on the making smart and safe decisions. For a transparent and honest look at how to start investing in property, keep reading for some Asset Academy tips to help embark on a journey towards earning rental income.
Getting started by investing in property
Before you start investing in property, you may be wondering which investment strategy to use or how to differentiate a good investment from a bad one? Before either of these questions can be answered, it will beneficial to take a step back… all the way back.
The first question to answer is: why do you want to start investing in real estate? Is it for passive income? Financial freedom? Security for the future? All of these are valid outcomes, however, they do not get to the why. The why will be based on your core values and what you hold dear to your heart.
Do you want passive income because you are passionate about a following a dream and you want the freedom to pursue it? Do you want financial freedom so you can spend quality time with your family? Do you want security to safeguard your welfare needs later on in life? Clearly understanding what is driving you will help you to make the right choices now and motivate you to keep going.
Property investment is a long term plan
A common misconception about property investing is that it is a short term pathway to wealth. The truth is quite the opposite. Investing in rental properties is an income generating strategy over the long term. Monthly rental income will not make you rich overnight. It will take time to build a portfolio that will generate adequate income to make you financially free.
This is how understanding your values and your why will help. Knowing what you want to achieve and why you want to achieve it will help you to breakdown your plans over the next year, five years and even ten years. The initial steps towards building a portfolio may seem small, however through breaking them down you will understand the incremental measures to take.
Temptation to earn big returns as a property developer may tempt you to take big initial steps. With little previous experience it will be wise to grasp the basics first. Skill comes from a solid knowledge of the basics and it will be understanding these essential skills that will create the foundation for your success in the future. Patience will be your asset at the start.
How do you look to mortgage lenders
At an early stage on your journey it will be wise to review your financial situation and what information is held on you by credit reference agencies. Buy-to-let mortgage applications, for example, require a different set of criteria to residential mortgages. However, being granted your first buy-to-let mortgage will be dependent on your personal circumstances along with other factors.
Lenders will want to see how you will keep up with mortgage payments if the property is vacant in between tenancies for example. They will look at your previous financial history to help them assess the level of risk that you pose from a lending perspective. If your credit score is likely to be a hurdle, you may not need to own a property to earn income from it. You can read more about how to do this with our blog post Rent to Rent Deals: 5 Things We Love About Them.
Gain the knowledge
Key to your success will be knowledge. Too many people enter into property investing, either planned or accidently through an inheritance for example, without the knowledge, only to get stung later on. Changes to interest rates and property prices are inevitable and can be the downfall for some landlords. The only way to stay safe and successful will be through knowledge.
How to find the best strategy for your needs? How to find the best investment area for that strategy? How to calculate your purchase price including costs such as stamp duty and the costs of estate agents? All of these will determine your success and will require doing your due diligence.
All decisions will be your responsibility so make sure you are educated enough to make the right choices. With so much information and misinformation available it can be difficult to separate the good knowledge from the bad knowledge. Your due diligence should also be applied to the source of the information that you will come to rely upon. You can read more about in our guide Are Property Investment Courses a Scam: 5 Tips To Stay Safe.
The first step on the ladder
Understanding why investing in property will meet your needs will be your first step to take. Perhaps a different investment strategy will be better suited to your needs. From here you will be able to begin planning your strategy.
The next small step, getting your finances in check, will help you greatly. It can take time to clear bad debt or rectify an inaccuracy on your credit file, so take charge of your finances now to set yourself up for success when the time comes for mortgage lending.
Finally, invest in education that is trusted and based on real-world experience. If you want to know more about the property education courses that we offer, you can book a FREE one hour Discovery webinar here. However, if you are not quite ready for a Discovery webinar yet and simply want to learn more about Asset Academy, why not take a look at what makes us the experts in property investing education here.