Becoming a successful property investor is an exciting and rewarding experience. With the right strategies and advice, you can turn your real estate investment into a reliable source of income and become financially independent. This article sets out how to become a property investor in 2023.
How much do property investors get paid?
It is difficult to put a specific amount on this because there are so many different variables. However, according to the Motley Fool website, the average residential property investors earn between US$ 27,500 to $121,500 p.a. With those who ‘flip’ properties earn an average of US $62,900 per flip, minus refurbishment costs.
How do you get started?
There are many different reasons why people get into property investment. You need to understand your personal motives for investing in real estate.
Questions you might want to think about?
- Do you intend to use your real estate investing career as a supplement to a full-time job and to improve your existing financial situation?
- Are you making real estate investments to build a successful retirement portfolio for your later years?
- Or do you want to start a full-time real estate business and think that buy to let investment is where you want focus?
You must be clear on your goals before getting into investing. Once you are clear on your goals, you can use these as guidance to help you make a thorough plan to achieve your goals.
Creating your plan for how to become a property investor in 2023
Once you understand what you aware or what you are trying to achieve. The next step in becoming a property investor is to create a plan. You will need to understand:
- You’ll need to decide how much money you can afford to invest?
- Where are you going to invest?
- The type of properties you’re interested in.
- Finally, how will you asses different investment options to determine what is the right property?
Next, you’ll need to educate yourself on the basics of property investing. You’ll need to learn about the different types of properties, the different financing options, and the legal and tax implications of investing in real estate. You can get this information from books, online courses, and other resources.
How much can you borrow?
The next step is working out how much you can afford to borrow. All but a few investors will be able to purchase a property without the use of a mortgage.
When looking to borrow money for an investment mortgage, it is important to consider a number of factors before taking the plunge.
Your credit score is a major factor in determining how much you can borrow. Generally, the higher your credit score, the more you can borrow. Other factors to consider include your income, current debts, and the amount of equity you will have in the property.
Next, consider the type of loan you want. This will depend on the purpose of the loan. Are you looking for a fixed-rate loan or a variable rate loan? Fixed-rate loans offer stability, while adjustable-rate loans are more suitable for investors who plan to hold their property for a shorter period.
The next step is to determine how much you can comfortably afford to borrow. Don’t forget to factor in any additional costs associated with the purchase, such as legal fees, stamp duty, and other expenses. Once you have an idea of how much you can afford, you can start to research the different lenders available and compare their interest rates and loan terms.
Once you understand the basics, you should investigate getting pre-approved for a loan. This will give you a good indication of how much you can afford to invest in a property.
As you make your decisions assuming everything will go right. Many things can wrong when it comes to property investment, you need to factor in items such as repairs, periods of vacancy and other unexpected costs.
Where are you going to invest?
When it comes to buying an investment property, there are several factors to consider. Location is one of the most important factors to consider, as this will determine the potential rental income and future capital growth. It is important to research thoroughly, as the right location can make or break an investment.
Other factors to consider include infrastructure, access to amenities, public transport options and potential for gentrification in the area. These all add to the desirability of the area and should be taken into account when considering a potential purchase.
It is a good idea to talk to locals and real estate agents to get a better understanding of the area. They can provide valuable insight into the type of tenant the area attracts, and any potential risks that may be present.
It is also important to consider the size of the property and its potential for redevelopment. Properties with potential for redevelopment can be a great investment, as they can be renovated and sold at a profit. This should be weighed up against the potential rental income that can be generated from the property.
Finally, it is important to consider the cost of the property. Research the recent sales in the area to get an idea of the market value of the property, as this will help to determine the size of the deposit and mortgage required. It is important to purchase the property within your budget and ensure that the rental income covers the costs of the loan.
Buying an investment property requires careful consideration, and taking the time to research thoroughly is essential for success. By considering all the factors, you can be sure that the investment you make is the right one.
Research the market
Next, you should research the different markets that you’re interested in. Look at the local housing market and explore potential areas that may be a good fit for your investment goals. Research the demographics, job market, and local amenities in the area. You’ll also want to research the local laws and regulations that may affect your investment. Once you’ve identified the right market for your investments, you’ll need to find suitable properties. You can use online listings and other resources to search for potential properties.
Once you’ve thought about your reasons for investing in property and your overall goals, you should have a better idea of what to look for in an investment property.
The main things to pay attention to when you’re finding an investment property are:
- The potential rental yields and rental returns available with the property
- The potential for capital growth
- The likelihood of demand from tenants
Tax
Finally, you need to think about tax. The reality is property investment has changed a lot over the years, your biggest cost after the interest will be tax.
It may well be that buying in another country may make more sense than buying in the country you live in. Property unlike shares, crypto currency or other investments is a long-term investment. It takes months or even years to stabalise the income of a property. It is very expensive to sell and not particularly liquid. It is likely your life will change a lot whilst you own the property and you need to take this into account.
Are you thinking about buying an investment property in the UK?
If you are thinking about buying a property in the UK, you need to make sure you do your homework before you buy. Mistakes made investing in property are very expensive to fix.
We have built Du Val Global to help investors think through the issues which matter when it comes to investing.
Du Val Global
We built Du Val Global, real estate investment software designed to help investors make better investment decisions when they buy property. Our platform provides investors with the real estate investment tools to help with critical decision-making, including
- Research – access to powerful property analysis provides real-time market research, allowing
landlords to have a complete picture of tenant economics, prevailing
rents, and capital values - Financial Analysis – a property investment tool that investors can use to create financial models to determine net return after tax and return on investment. Investors can understand specific tax implications. Our property comparison tool allows investors to compare investments on an after-tax basis to determine the best investment for them. Investors can even compare properties in different countries
- Du Val Dynamic Pricing™ – Du Val Global offers a range of properties for sale from leading developers in Australia, New Zealand, and the United Kingdom via its proprietary Du Val Dynamic Pricing™ algorithm. This sophisticated pricing model levels the playing field for small investors through aggregation, providing discounts of between 7.5% and 15% from retail prices, which, until now, have only been available to large institutional investors.
- Portfolio Management – a property portfolio planning tool investors can use to monitor and track the performance of their investments.
Interested in giving our platform a go? Start your free trial today at Du Val Global.
