In the spirit of Black Friday weekend, how can you find Limited Time Only Property Investment Deals in your area?
In this blog I’m going to share with you one of the biggest secrets when it comes to knowing How to Become a Successful Property Investor, learning how to find good property deals.
What makes a good deal for you, will most definitely be different to someone else, but there are always core aspects which make it an investment worth being involved with.
It’s important to remember that successful people are decisive, so when you come across a potential deal that fits the criteria - take full opportunity.
Equity in the Property the Day You Buy
Always try to lock in the equity. Rather than waiting to see what happens within the current Housing Market, it doesn’t matter what happens in the long run if you look out for this factor when making your next purchase.
Below Market Value Property
BMV properties should be part of your essential checklist for Limited Time Only Property Investment deals. I encourage you to look out for properties with a purchase price below the normal retail price as that is what most investors would pay.
Properties In An Area of Strong Rental Demand
Also mentioned in my book, Property Magic, it’s always a safe bet to buy property in an area of strong rental demand. This is an area where there is an increasing population so that when tenants move out they can also be quickly replaced.
How do you go about finding them? I recommend you search for rental demand in that particular area online, or alternatively speak to your local agents and do your due diligence.
The area might have an increasing number of jobs, building new hospitals or business parks that will bring more people into the area that will work and live there.
Taking Good Cash Flow Into Account
Any investor who is buying a property to rent out for the long term, will want a positive cash flow on a monthly basis. This means that there should be some profit left over each month after you take out all of the expenses.
Rental income needs to be at least 125% of the monthly mortgage interest. So if the mortgage interest is £400 a month, then the rental income needs to be at least £500 per month (i.e. £400 x 1.25). In this case if the rent was £595, then the approximate cash flow would be £95 per month. For this approximation we usually base it on an interest of 6% p.a. This is actually slightly more than you can get a mortgage for in the current market.
When looking for limited time only property deals, you should ensure that after all of your outgoings there is always profit leftover. If there isn’t any profit left, then this should tell you not to go ahead with the purchase. Hunt and find properties at the right price and always think about where / how it stacks up.
Ability to Add Value
There are investments within my property portfolio that seemed like a good idea at the time, but in hindsight, given what I know now, I wouldn’t have bought these properties.
I would avoid buying brand new developments as they pose the problem of you paying a premium price. In the same way that the value of a property might not come down, it will take a while for the value to go up. Adding to this, as soon as you’ve had tenants in your property for 6 months, it is no longer a new property. This is why I would especially avoid buying a new property, given that we also want equity locked in, it would be difficult to have this.
Whilst older properties may seem like a hassle at the time, you can always add value through refurbishments, giving you more than what you initially put down as a deposit.There are seven main ways of adding value to a property as follows:
- Refurbishment to improve the appearance and condition
- Sub division into smaller units
- Extend into the loft or attic space
- Dig down into the basement
- Extension at the side, or back of the property
- Change of use and conversion
- Planning uplift
"Any investor who is buying a property to rent out for the long term, will want a positive cash flow on a monthly basis."
It’s ideal to be on the lookout for properties that have a low initial investment, in order to utilize a great strategy - Momentum Investing. This means buying at a really good rate, adding value, refinancing in order to take money back out. This is how a lot of my Property Mastermind students have built up their Property Portfolio with time.
I hope this blog has been a real eye opener when it comes to finding your next property deal, with Tips and Tricks included to help you succeed and work out what works for you.
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