During the Covid19 pandemic, demand for rental property hit an all-time high, and not just in desirable city locations. The need for more suburban or rurally located property has been growing as renters working from home need more space and are searching for dwellings with features like gardens and terraces.
This means that new investors and landlords are entering the market looking to capitalise on the increasing number of home renters. For new property investors, the pathway to profitability will need to be navigated carefully.
There are some key factors and considerations that can make the difference between success and failure.
1. Determine property investment type
If you are new to property investment you will need to decide what type of buildings you will be dealing with. You may decide to specialise in commercial or private tenancies, offering long term or short term leases. There will be other decisions to make such as; will you deal in retail or office space for commercial properties? Or for private rentals; will you lease homes or apartments? Depending on area and demand, some property types may rent better than others so it is important to take this into account.
2. Decide on your location
Knowing your area can put investors in a prime position to take advantage of opportunities. Having local knowledge means that you can position your properties to gain maximum profits from economic or market factors. You may have an office building and know that a retail park is to be developed soon, or if you own an apartment building that is near a popular university you can advertise to an influx of students. This extensive knowledge also means that you can quickly assess the viability of investing in any new properties as they become available.
3. Take advantage of financial incentives
Banks, the government, and lending institutions periodically offer great incentives for property finance. Being aware of the best deals and taking advantage of them can often save thousands on the cost of property investment. In the wake of the recent pandemic, there are government schemes and offers to be had, and interest rates continue to remain affordable. As with any investment the key is to invest when prices, and interest rates, are low.
4. Become an expert at risk assessment
Not all property deals will be a good deal. This is where educating yourself and learning about the property and the area will stand you in good stead. Do extensive research and make decisions based upon the evidence. It can be easy to get caught up on something that looks like a once in a lifetime opportunity, but do the numbers support it? Perform a cold and detached analysis and make decisions based on the facts.
5. Be careful not to over-invest
Becoming proficient in property investment is a proven way to earn high returns, however, it’s best not to sink everything you have into opportunities, even if they look good. Retain some operating capital for unseen events and eventualities. If the market slows down, for example, you may need to access funds quickly. Something that becomes a lot more complicated if all your money is tied up.
New property investors will benefit from taking the time to research and examine property deals and make decisions with their head rather than their heart. Property deals come around all the time and passing up an investment can sometimes be the best decision. It can often be best to wait for the right deal rather than letting enthusiasm cause you to invest in any deal. With analytical and fact-based investment, there is no reason why new investors cannot be successful right from the beginning.