It is said that you make all of your profit when you buy
a property, not when you sell it, as you are in more control of what you pay
rather than what you are forced to sell for. With this in mind, why pay high
end retail price for a property just because it looks sweet & idyllic, when
what you need is a property that first & foremost meets all the financial
requirements of an investment landlord?
It is very easy, especially for the novice property
investor, to fall in love with a property and let their heart rule their head,
and become so emotionally involved that they lose control of their finances and
let their emotions win, by committing to a property that THEY might like to live
in themselves. The most important message to convey in all of this is that buy-to-let
property investors MUST buy well in the first place, because if you start the
investment process in the wrong place, the rest of the mathematics that need to
be in place to validate this transaction just do not stack up. If a property
price is too high, and you just cannot get anywhere negotiating money off the
price, then there is one thing to do and that is WALK AWAY – like buses, there
will always be another one along soon.
The novice investor often thinks that by paying more for
a property they will get a better property (not necessarily true, again, just
buy well) instead of considering house prices & rental values around the
local area and working out what drives them. They cannot reasonably expect the
market, which is an average of many transactions and house prices, to change
its tune in order to meet them at their now inappropriate level of expected return
(yield) that they expect, simply because they paid too much in the first place –
market forces don’t work like that. If a property investor is not sure on the
potential rental levels for a given location, just get them to speak to me for
free, impartial advice. I can let them know not only how much rent to expect,
but from that I can advise them how to work out what the maximum is that they
should be paying, and how much rental demand there is for a particular property
– there is absolutely no point in buying something, or somewhere, where very
little demand exists.
As for buyer beware, well they certainly should
beware it with a capital B. Check out the larger, more important facilities in
the house such as the boiler, electrics and plumbing, especially when paying in
cash, because many investors won’t do this, and if they end up buying a problem
then they will own that problem.
