14 Signs You Are Ready to Become a Real Estate Investor and Landlord
by Property Investments UKThe Property Investments UK editorial team have been researching and writing about the UK's property market for more than a decade.
If you’re interested in investing in real estate then you’ll probably be able to recognise the signs that you’re ready to invest. Here are 14 signs that should tell you you’re prepared to take the plunge and become a real estate investor or landlord.
14 Signs You Are Ready To Invest In Property
- You have some money to invest. Not all real estate projects need a lot of money, as there are ways to raise finance for your project. But you will need at least a deposit before you’re ready to get started.
- You have a contingency fund. As well as some investment cash you’ll need to have a contingency fund. You’ll find this useful in case things take longer than you expected, in case your expenses are higher than you expected, or in case things go wrong.
- You are reasonably financially stable. Ideally, you’ll have a regular income from some other source to rely on in the early days, manageable monthly outgoings and no debt or at least only manageable debt.
- You feel frustrated by what the banks are offering on savings accounts. You want a better return on your money than conventional savings.
You want the money you have to work much harder for yourself. You’re looking not just for a 3% or 4% return on your money but 10%, 20% or even more.
- You feel you’re now prepared to accept some risk, in return for a better potential return on your money.
It’s often said that a property investment is ‘safe as houses’, but all investments involve some risk. There’s always an outside chance that you could lose all your investment.
Don’t invest any money you can’t afford to lose is a very good adage to follow in real estate investment.
- You have a long term plan. Real estate investment is always best thought of as a long term investment. It’s frequently an investment that pays off over 10, 20 or more years. You should be able and willing to get into real estate for the long term.Ideally, your plan should centre around where you want to be in 10 or 20 years. Real estate should be part of how you want to get there.
- You’re thinking about starting a pension. Or you already have a pension but you’re thinking about ways to boost it. Real estate can work very well as part of a pension plan.
- You want to diversify your investment portfolio. You probably already have some investments. Maybe they are doing quite well. But you can see the risks of having all your eggs in one (or two) baskets.You can see that real estate makes sense as part of a diversified investment strategy.
You want to add to your investment portfolio with something that is literally more ‘real’ than financial instruments like stocks and shares, investment trusts, currencies or crypto.
- You’re interested in real estate, or even fascinated by it. You’re interested in the way the real estate market works, and its ups and down. You’re fascinated in the way house prices work. You’re excited by the idea of providing people with more and better places to live or work.
(You don’t have to be interested in something to invest in it. But it makes it a whole lot more rewarding if you are.)
- You have some time free to dedicate to real estate investment. Not all real estate investments are time consuming. While some need a high time input some are very hands off. But you’ll still need some time free on a regular basis to find, analyse, run and manage your investments.
- You know you’re willing to put the work in to make your real estate investment a success. You’re willing to do research, to take advice, to hunt out investment properties, to negotiate and to do deals.
You’re willing to do some hands on work and get your hands dirty sometimes too – although not every kind of real estate investment involves actually doing any building work yourself.
- You have a general idea of the type of real estate investment strategy or strategies that might suit you best. For example, you have in mind different strategies such as buy to let, flipping, renovation and refurbishment or property development.
- You’re pretty confident about future prospects for real estate prices. You’re confident that, whatever level real estate prices are at now, they’re likely to rise over the term of your long term plan.
You might even have done your research on pricing and feel that there are bargain properties out there right now. Properties that are almost certain to appreciate in value into the future.
- You’ve actually seen a property you think would make a fantastic project. You’ve got the vision to see that it could be something so much better than it is now. You can see how value can be added, so it could be worth so much more. You can see how it could be renovated or developed, or could become the first property in your rental portfolio.
You’re thinking about arranging a viewing, or even making an offer. You’re thinking through how you could finance the project. You’re even thinking about the day when you will get the keys, and be able to make a start on the project.