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2. What is your property investment strategy?

How do you find the best deals is not the right first question? The correct starting point for any property investor is what is your investment strategy?

A property investment strategy should be decided by looking at the following before looking into the specifics of the strategies:

RISK:

  • Risk is absolutely fundamental to investing in property. No discussion of annual returns is meaningful without at least the mention of the risk involved.
  • By better understanding what risk is, investors can build property portfolios based upon their risk tolerance.

RISK TOLERANCE: PROPERTY VALUES

Limited owner occupier: £20,000-£50,000 valued properties.

Typically Local Housing Allowance areas with little investment. Properties in these areas are typically bought up by amateur investors in search of the "shiny coin" returns. While there may be success stories, typically these properties do not produce anywhere near the annual returns that they are supposed to do and an exit strategy is limited due to the resale market having fewer purchasers buying for themselves.

Low valued property - £50,000-£90,000.

Typically a mixture of Local Housing Allowance and professionals in these areas. These type of properties are generally bought by first time buyers.

Property strategies that can be used:

-Lease options
-Ideal areas for high returns on Single Buy to Let properties.
-House in Multiple Occupation.

Medium valued property - £90,000-£150,000.

Typically owned by professionals. These type of properties are generally bought by first time buyers or people buying family homes. They have higher potential for capital growth and allow a mixture of property strategies to be implemented.

Property strategies that can be used:

-Lease Options
-Single Buy to Let properties.
-Serviced Accommodation.
-Buy To Flip.
-House in Multiple Occupation.

High valued property - £150,000-£250,000 +

Typically owned by professionals. These type of properties are generally family homes. They have the highest potential for capital growth due to the area always being in high demand and lots of historical investment.

Property strategies that can be used:

-Serviced Accommodation.
-Buy To Flip.
-House in Multiple Occupation.

INITIAL CAPITAL INVESTMENT:

How much money do you have to invest? The amount of money you want to invest will dictate which property strategy you can do?

SPECIFICS TO DECIDE:

  • How long do you intend to keep the property for?
  • What type of tenant or end buyer do you want to attract?
  • Every property strategy must be cash positive.
  • Surrounding yourself with a team of professionals around you.

NEXT STEP: Principle 3 of the 11 Guiding Principles of Successful Property Investment:

3. There are 5 clear property investment strategies.