No two days are the same whilst "on-patch" trying to source property deals for investors. Today was no exception and in fact, it was particularly interesting when I went to view a specific property presented by the a-list estate agent who works with me. The property was a mid-terrace house in Dartford. The agent knew the investment criteria I require and the type of properties my investors would be interested in - this property was nothing close to the requirements. Notwithstanding, I went over to see the property and straight away, with the expression on my face, she could tell that she wasn’t offering a deal.
At this stage, I had to recap the requirements to her again and she was trying hard to tell me how the property would be worth more, when fully refurbished. When she noticed I was heading toward the door, she then asked me a specific question which I thought I should share on this blog. This is simply because I get asked the same question by a lot of other people who wants to know about investing in property and how to make the right choices. The question she asked was and I quote; "how do you know you are buying the right investment property"?
I giggled and said to her, buying the right investment property solely depends on the investor's expectations and what they want to achieve. Furthermore, I gave her the four-step model I use in ensuring I buy the right investment property.
Here are the steps I go through to ensure that for investors, I am buying the right investment property.
1. Capacity
When buying an investment property for investors, I source for similar properties within the same area to suit the demographics of tenants in the locality. These are usually three or four bed houses, with potentials to add value, require similar refurbishment and attract the same tenant type. Investing in a property with capacity has immense benefit as it can be quickly converted from one property strategy into another.
2. Price
At all times, I ensure that I buy at the "correct price" because this is extremely crucial to making sure investors get good return on their investment. In achieving this, I follow a set process and use specific tested tools to get properties at a discount. This simple approach in addition to having local knowledge of the area helps ensure buying at a discount and reducing the risk of paying too much for properties.
3. Location
The location of an investment property is very important. When sourcing properties for investors, I ensure the houses are in a city and in close proximity to the town centre or city centre. Other things I look for are good schools, fantastic public transport, good road network, local amenities, night life, hospitals and shops. It is interesting how these factors can mean the difference between a property attracting tenants and one that sits void for longer periods. Tenants are constantly seeking properties that does service their needs. Over time, an investment property bought to this specification would gain capital growth.
4. Cashflow
When I source properties for investors, I run an extensive check using a cashflow formula that ensures it cashflows positively. This approach when done correctly ensures that the investor never puts in anymore funds into the property again even if the property is only tenanted for 11months of the year. Cashflow from steady rental income makes holding an investment property affordable as it produces constant passive income.
Investing in property is mainly for cashflow and capital growth so buying a house with the right capacity, at the right price, in the right city, renovated to the right standard and attracting the right tenants is absolutely critical.
If you find something interesting, have any questions or would like to buy the right investment property, I will be more than happy to share my experience or knowledge in order to help.
Regards,
Emmanuel Adedipe | achieving more together
