As it’s common knowledge that buying and selling property can be a very lucrative way to make money, a career path almost, more and more people are making it their goal to start investing. However, this isn’t something that should be taken lightly. It might look like something absolutely anybody can do with a bit of cash, however, it takes more than that to make working with property worthwhile and a great opportunity.
Don’t start dealing with property until you’ve asked these questions!
What Sort Of People Do I Want To Deal With?
Dealing with property doesn’t necessarily mean you have to be a huge people person. After all, you’re not going to be calling your tenants to catch up everyday. That being said, you do need to have a good idea of the sort of people you want to deal with. Who would you rather deal with; young couples, families, professionals? Think about it carefully, and figure out the types of properties you’ll need to have in your roster in order to make it work.
You may want to work with apartments, but you’ll need to be ok with renting to professionals who may move at any time. There are pros and cons to each option, so consider your budget, location, and lifestyle before coming up with your final answer.
How Involved Do I Want To Be In The Property Management Side Of Things?
You can be as involved as you want in the property management side of things. You can manage the whole thing yourself, or you can get a company to do it for you. All you’ll have to do is keep on paying them, and any calls regarding faulty boilers in the middle of the night won’t be left to you to deal with. Again, this depends on your budget. To begin with, you may have to be hands on, before building up your portfolio and loosening the reins.
Do I Have The Characteristics And Personality Traits Of A Property Flipper/Landlord?
In order to make money doing this, you need to make sure you have the characteristics and personality traits of a property flipper/landlord. Learning as much about house flipping as possible is crucial before you decide that this is the right path to take for you. You’ll need to have a number of different skills that will help you to succeed.
Does This Property Have Potential For The Future?
Ensuring a property has potential for the future is important. You can’t always predict which way the housing market is going to go, but if you have a good eye you should be able to spot a great property miles off. How could this property be built and improved on in the near future?
Have I Found A Good Estate Agent?
Having a good estate agent on your side is also important. They can give you advice when it comes to the property market, and ensure that your properties are inhabited by tenants as much as possible. There will be empty properties at some point for most landlords, so bearing that in mind will help you to prepare for the eventuality.
Am I In This For The Long Haul?
To become a real property mogul, house flipper, or whatever you want to call yourself, you need to be sure that you’re in this for the long haul. It could be anywhere from 5-10 years before you start making a return on your investments, and even then it may only be small. Those who make the most money have been doing this for years and years. Look at it as a learning opportunity and learn as you go along, rather than trying to make as much money as possible now. Think of the great future you’re creating for yourself by choosing to do this.
Am I Too Emotional/Analytical?
Two things that can mess up a deal: your emotions, and being overly analytical. Being too emotional can lead you to buying a bad property, choosing tenants that aren’t right, and bring up a plethora of other issues. Being too analytical could lead you to walk away from a deal that had potential, wasting both money and time. You need to try to find the perfect balance.
Are There Major Projects In The Area?
Major projects in the area may affect the property you purchase, who chooses to live there, and other aspects of life in the area. Make sure you look into any plans for the future before you decide on the property you’ll buy.
What Is The Local Market Like?
The local market is more important than the market in general. Look closely at the specific area you would like to purchase in and analyse the market. When you become more familiar with the local market, you’ll know when to sell, when to buy, and what type of properties to buy.
Do I Believe In The Perfect Property Deal?
The truth is, the perfect property deal doesn’t exist. Waiting around for it will ultimately lead you to ‘analysis paralysis’. This doesn’t mean you should settle for a deal you really don’t want to go for; it simply means that you shouldn’t let small factors that don’t matter when it comes to the bigger picture influence your decision.
What’s My Risk Tolerance?
This is an investment, so knowing your risk tolerance matters. There’s a certain degree of risk with any investment. Risk levels can vary with real estate. If you’re interested in flipping properties, this can be a big gamble. You’re assuming that you’re going to be able to sell the home at a price that’s high enough to recoup your initial investment and make the kind of profit you’re looking for.
If the market takes a nose dive or you go over your budget, your profit margin could shrink, or worse, disappear completely.
Make sure you ask yourself these questions and answer them honestly to get the most from your dealings with property, whether you make long term investments or go the property flipping route. Leave your own thoughts below!
This is a collaborated post.