research property investor

“Research is key”: how to become a successful property investor

The starting point for any accomplished property investor is research, says editor Ellen Klein, but there are plenty of important decisions to make along the way, too. 

In a blog looking at how a budding property investor today can navigate the current climate for a successful investment, editor Ellen Klein has outlined some of the key points to consider. And the starting point for anyone making a big financial decision is probably an obvious one: thorough research.

To start off the process, says Klein, it is vital to look into every aspect that will bring long-term benefits. “Research neighbourhoods and housing prices, save up for your down-payment and ensure that you are pre-approved for a mortgage so that you can pounce when the right opportunity presents itself,” she says.

While those unfamiliar with the current UK property market might still be inclined to look at ‘obvious’ areas like London to invest, some basic research could bring about a drastic rethink. For several years now, areas like the north-west, Yorkshire and the East and West Midlands have experienced booming housing markets. Parts of London are certainly still generating great returns for landlords, but there is plenty of data to show that other areas are winning out.

Risks and rewards

As Klein points out, becoming a property investor is not a decision to be taken lightly. While there are huge rewards to be had for those who invest well, there are risks, too.

“There is so much to consider, from operating costs and mortgage expenses to finding prospective tenants, handling maintenance and more,” she says. “Owning a rental property comes with significant risks attached, so you need to be sure that you are up to the challenge.”

Yet when comparing a property investment to an investment on the stock market, for example, there are clear advantages. For example, you have more influence over your property, says Klein; you can perform upgrades or repairs to attract high-paying tenants.

To borrow or not to borrow?

Being a property investor with cash can have its benefits, such as sometimes securing a lower price. However, Klein points out that it might still be worth considering a mortgage. This is particularly the case if you plan on buying more properties at a later date, as it leaves some money aside for future deposits.

Borrowing is also incredibly cheap right now. With the Bank of England base rate still at an all-time low of 0.1%, lenders are matching their products with the low rate, and are offering numerous competitive deals. Most speculation points to a base rate rise in the near future, so buyers are advised to secure cheap mortgage deals sooner rather than later.

Klein advises: “Use a mortgage calculator to start drafting how much monthly repayments, stamp duties and rates will cost you. Then, apply for pre-approval to check how significant of a mortgage you qualify for.

“Remember to make it clear that you plan on purchasing an investment property. This investment is governed by different rules to those that apply to primary residences.”

Extra considerations for a property investor

There are a number of other things to be aware of before you take the plunge to become a property investor, says Klein.

  • Check credit scores and down-payments on mortgages. You are likely to need a 20% deposit, but may only require a 15% one with some lenders and a high credit score.
  • You might need to gather two years’ worth of tax returns and two months’ worth of bank statements for the lender.
  • Determine your return on investment (ROI). This is calculated by looking at the rent money left after insurance, taxes, fees, repairs, and any other expenses, and dividing that by the amount spent on the property originally.

At BuyAssociation, our team of investment consultants can guide you through the process of investing in a property direct from the developer. We also work with partners who can offer advice where needed. Get in touch today for more information, and browse some of our current investment opportunities

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