Investment in property is steadily becoming more popular with many taking advantage of current low interest rates for mortgages. However, there are many pitfalls to property investment and if not organised properly it can become a stressful and expensive experience, according to property investment firm Midas Estates.
The company says that there are several common mistakes that people make when building a property portfolio: borrowing an amount that’s going to cause stress financially repaying it, not having appropriate advice, not doing enough of your own research and not following the correct referencing and credit check procedures for tenants. Other issues include managing property without any assistance from experienced agents, not having a financial buffer in place and buying a property and becoming a property investor if you’re not in it for the long term.
According to the firm’s founder Ian Clark, the key to getting it right and making your money work for you is working with a good advisor who can help guide you through all the potential pitfalls. Midas Estates, which describes itself as a ‘one stop’ property investment company runs free property classes with the aim of educating people in the core principles of property investment and undoing the myths surrounding creating a future by investing in property.
Quote from PropertyForum.com : “I’m interested in creating a real estate portfolio with buy-to-let properties located in several different countries, but I’m not sure how to practically manage it all.”
Core subjects covered include how to find the perfect location, how to negotiate the maximum discount, how to structure your finance, how to find the best tenants and manage your properties, how to minimize risk and how to exit with your goals achieved.
An example is Malcolm Wilson, 47, an engineering and management consultant in the rail sector who got into property investment by accident. By 1999, having moved jobs a couple of times and let out his previous house, he had accumulated a couple of rental properties. Realising that property could provide the passive income and financial freedom he desperately wanted, he and his wife Suzy had assembled a portfolio of five properties by 2005. Then he became stuck. The portfolio wasn’t yet large enough to provide a retirement income and yet the repayment mortgage already required extra cash every month. Adding more properties would simply mean more stress on the couple’s finances. They couldn’t see a way forward.
In 2011 Malcolm was introduced by chance to Midas Estates whom he quickly realised had the knowledge and expertise that he was missing. The Midas team set to work, restructuring the existing portfolio, switching to interest only mortgages and releasing equity as a deposit for no fewer than three more properties. They showed the couple how they could help them build the portfolio to provide a nest egg for retirement without requiring constant topping up with cash.
Malcolm’s confidence in his investment portfolio grew, helping him to overcome his scepticism and he quickly became happy to let Midas handle everything. Research into his and Suzy’s next purchases took into account vital factors such as location, amenities, demand for rental property, and confidence in good capital growth, exactly the priorities on Malcolm’s list. All the while this was freeing up time for Malcolm to concentrate on his day job. He realised his portfolio could be productive, low stress and fun despite his having limited time and knowledge.
The couple now have a portfolio of eight properties, including a show home, flats in Bristol, London and Newquay, and a solid retirement plan. The last 18 months has been a lot easier than the previous 17 years and Malcolm’s long term plan is to continue to build his portfolio, working closely with Midas who will monitor his investment and help him ensure that it continues to perform and build his retirement fund.