Do’s and Don’ts of Property Investment

What makes a property investment successful? It’s generally the same with any investment – do your research and learn from your mistakes.

All investors experience setbacks and mistakes, whether you’re a first-timer or seasoned. Since the market can go up or down and the value of an investment can rise and fall, the most important thing is to prepare.

Property investment should be done over the long-term, which brings up some important considerations. Here are the do’s and don’ts of property investment.

Property is a great way of diversifying a portfolio.

Aside from being a different vehicle to asset classes such as stocks, property itself is incredibly flexible.

A property portfolio could include several different property types and locations which would further mitigate the risks of having all your investments in one basket.

This allows you to target different demographics and decreases your reliance on a single market or type of tenant.

Tips: If you’re looking to identify a property investment strategy, browse some of the most commonly used within the property world here.

As a property investor, it’s important not to buy simply for convenience.

While having your investment close by can help with solving maintenance issues, performing inspections or finding tenants, it doesn’t guarantee a high-performing asset.

Ideally, you’ll prioritise your locations by demand, potential growth and your budget. If you can find an affordable property that is expecting high growth, you’re heading in the right direction.

If your chosen development has amenities to hand, you’ll typically experience higher demand and less void periods – another key metric for investment.

Tip: Work with industry professionals in the local area that understand the local market. 

As a property investor, it pays to regularly look at your investments and how they fit into your wider strategy.

Some investors will be seeking passive income, while some will be more focused on capital growth – it all depends on your long-term objectives.

Since some strategies can be much riskier than others, it’s vital that you consider your personal goals and circumstances, especially if these circumstances change at any point.

Tip: Have large objectives in place that can then be split into smaller milestones you can use to measure progress.

Property investment can be lucrative but it requires plenty of work and patience.

It’s important to ensure that you perform research around your investment location, discover your ideal tenant demographic and maintain due diligence at every step.

This is what makes property investment such a time-consuming activity for many investors – there’s a lot that needs to be done to lower risk and stay ahead of the market.

Tip: Perform as much initial research as possible. Our investor resources are a great place to start.

As much as it would make life easier, there is no definitive example of the perfect property.

It’s a much better idea to consider your target demographic, budget and location before using all of that information to choose your investment.

For example, if you’re looking to attract more young professionals, you’ll typically end up researching transport links, amenities and nearby businesses.

This will be a very different search to those looking to appeal to students. Each type of tenant has different priorities which need to be considered.

Tip: Consider a range of different properties that could suit your investment strategy.

Tenants are the most important part of any property investment.

You need to find the right tenant for your strategy as this can help you combat issues further down the line.

Finding – and supporting – the right tenant can help ensure rent is paid on time, less complaints are made and void periods are less frequent.

Once the tenant is in the property, maintain and encourage communication, whether that’s directly or through third-party agents.

Tips: Encourage tenants to report issues and get them fixed quickly – this fosters a positive landlord/tenant relationship.