A first-time property investor is full of confusions and anxieties. Indeed, to know how to start investing in property involves more than browsing, researching and looking around. Wealth BCI have come up with the following expert tips to help first-time investors gain a solid footing.
Let’s discuss 5 key steps towards it:
- Begin with identifying your financial stage
At its most fundamental, property investment is nothing more than a means to improve one’s finances. Therefore, before you invest, you should capture a brief overview of your financial state.
You might be yearning to reach financial independence. In that case, you need to keep tabs on the savings rate. If your income is below average, the savings rate should be fixed at 10 per cent. If your income is above average, you may consider a savings rate of 50 to 75 per cent.
- Choose a specific investment strategy
There are five stages of developing an effective investment strategy.
The first is your survival capacity. It involves sticking to your day job and paying your bills on time. Secondly, keep stable by paying off debts and piling cash reserves in the bank. Next, improve the savings rate depending on the extent of your wealth. Fourthly, focus on personal growth.
Lastly, you withdraw from your wealth and invest into properties to turn it into a regular income.
- Select a target market for investment
The foremost question is whether you should invest close to home or in a wholly new market.
According to Wealth BCI, investing close to home is preferable, if possible. The immediate benefit of going local is the intimacy with the contours of the market. It is easier to evaluate the market, too.
- Develop your core team
Property investment is a team job. You cannot expect to succeed without a team to back you up.
Availing independent contractors and financial advisors can help you stick to the right path. Your team may include your closest contacts, distant professionals and technical/functional agents.
- Prepare your financing model
There are various financing options available. Some of the widely preferred ones include Federal Housing Administration Loans, portfolio loans, conforming loans, hard money loans etc.
Your choice will count on your current financial status, your investment strategy and personal preference. You may avail the individual capacities of your team members as regards the loan choice. Make sure you can rely unhesitatingly on your team members in this respect.