Fruitful Property Investment | The Golden Rules for Success

Property investment is one of the hottest things going among both casual and professional investors these days. However, not all property investors earn the high returns often associated with buying residential properties. You do not have to be one of the failed investors if you follow our golden rules for success.

These five rules are time-tested and true. The best investors follow them, knowing that a high return on investment is likely in most cases. And even when a given property does not meet expectations, it is the rare exception.

Here are our five golden rules for success:

1. Exercise Patience

The very first thing that needs to be established about property investment is the fact that it requires patience. Remember, you are purchasing investment properties for sale; properties that will yield high returns through residual rental income. Nevertheless, earning those returns requires time.

If you are simply looking for homes you can turn around and resell in under six months, you are not truly engaged in property investment. Instead, you're engaging in a type of short-term investment similar to stocks and bonds. It's a different environment altogether.

2. Establish Realistic Expectations

In a perfect world, every property you purchase would be at a bargain price and would require little or no renovation. However, we don't live in a perfect world. You need to understand that the world of property investment regularly includes things like:

  • tired, run down, and vandalised properties
  • limited documentation
  • uncooperative banks and other sellers
  • local housing, property and safety regulations.

Do not be foolish enough to believe that any of your transactions will go smoothly. Adopt a realistic approach with the expectation that there will always be hurdles to overcome.

3. Conduct Plenty of Research

Investment properties for sale, by their very nature, involve many unknowns. It is important for investors to do plenty of research before purchasing a property. That involves inspecting the house, finding out about any legal issues involved, and thoroughly researching neighbourhoods, rental rates, property values, and so on. And when you think you are done researching, start over and do it again.

4. Don't Overextend

If you can pay cash for your rental properties, you are in the best possible position. However, if you cannot, you are going to have to secure buy-to-let financing. These packages typically require monthly rental income of at least 125% of the mortgage payment. If you are using financing, do not overextend to the point that one or two negligent tenants will put your finances in a precarious position.

5. Maintain Your Focus

The wisest investors make property investment work by focusing on specific geographic areas and tenants, and then maintaining that focus. So get to know the areas where you want to purchase. Get to know the types of tenants that live in those areas. By maintaining your focus, you will maximize your ROI.

The right property investment can mean significant returns through rental income, for many years into the future. Fruitful Property is in the business of helping you find just the right investments for your circumstances. Let us put more than 30 years of experience to work for you. You'll find we present our clients with only the most attractive investment properties available.

Nick Hopkinson

by Nick Hopkinson - Property Investment commentator and Fruitful founding director.

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