Everyone’s goal when making property investments is to gain a profit. In as simplistic terms as possible, it can be done by purchasing a property with buildings that have rental units already occupied and collecting the rent or buying property and developing it.
This sounds relatively straightforward, but as successful investors like Yiannakis Georgiou Polycarpou will attest, much more blood, sweat, and tears go into the process if you intend to build an empire. Not everyone who enters the industry will accomplish this goal, nor does everyone have that exceptional ambition, but most do hope for a reasonable level of success.
How do you know when you are reaching a point where you can call yourself a property investor with confidence? Let us see.
What Are Things A Wise Investor Will Do?
Yiannakis Polycarpou did not get to his station in life without developing a method for his investing practices. Each investor becomes accustomed to their own system that works for them, helping them achieve a successful outcome with each investment they land. Open this article to learn a few habits of more successful investors. What works for one might not work for another. Of course, some of the fundamentals are across the board for each person in the industry. Let us look at what all wise investors do and if you are ready to dive into the leagues with the heavy hitters.
Running the figures
When you find the ideal investment, and it is a bargain, it is time to buy. Not if you are a wise investor. Before you jump headfirst into a purchase, aside from the basics like list price, mortgage payment, and the rental ratio, there are many variables to consider.
You will need to factor in maintenance, insurance costs, and taxes. That does not include the possibility for HOA fees and occupancy rates, all necessary to discern if there will be a positive cash flow at the end of the day.
Another investment worthy of the cost is a management company meant to handle all the applicable duties relegated to a property manager. With all the figures in hand, you can ascertain a rental ratio comparable to properties in the area and determine your end-of-the-day returns.
You will likely have copies of records that need to be maintained in an organized fashion typically scanned into a computer system. But often, as a seasoned investor or even a newcomer, a management company will be your next best associate since these are well worth their hefty fees.
These representatives will help organize the insurance policies, financial records, expenses for taxes, leases, and anything related to the properties in digital files for each property for easy access.
A good investor knows you cannot discern a property’s profitability by the price tag. The factors that determine whether you will see returns are first and foremost (always) the location and if there is a high demand currently for this sort of property.
The condition is of significant relevance in determining rental capacity. There is a checklist of questions depending on the target audience you are looking for or that the specific location is suited for, but most importantly, is it in the hub of a town or city since most people will want to be near conveniences.
If the surrounding areas are not well kept or the homes are in disrepair, this could affect the rentability of your property or future development.
An essential piece of the puzzle, if the property will be a rental unit, is to ensure that the tenants are thoroughly screened. Again, a management company is worth their cost in value, typically handling the screenings.
The idea is to get quality tenants with whom you have no fear of damages, disarray, or discord. A subpar tenant can destroy profitability. Finding the optimum renter is an integral part of the investment process.
Once you grasp these and so many other intricacies that come with becoming a property investor, you still will not likely be on the same playing field as seasoned pros like Yiannakis Polycarpou. Still, you will probably be on your way to reaching goals that the average investor finds satisfactory.