While the vast majority of owner occupiers across the UK will likely have acquired their properties at or around the asking price the situation for property investors is very different. In some cases profit margins can be relatively small therefore negotiating the best deal is an integral part of the whole process. There are many ways and means of negotiating a property deal but do you have the right personality to negotiate the right deal for you?
Many people watch the property investment reality programs on TV and see some “lucky investors” acquiring properties well below the asking price. This is a very dangerous investment strategy because while it can create a significant return further down the line, it can also alienate potential sellers. If you really like a property then be realistic, speak with the seller, get a feeling for what they are thinking and by all means make an offer under the asking price but be sensible.
Once you have alienated a seller it is highly unlikely they will ever come back to you even if you were to return with a higher offer.
Never get emotional
Those who have ever looked into the world of property investment will have seen assets for sale which they “really want”. There is nothing wrong in having a genuine interest in a property but the moment you get emotional is the moment you often lose your sense of purpose and direction. Those who have created the greatest wealth in the world of property investment effectively think of property assets as boxes. You buy a box for £x and you sell it for £y banking a profit. Never get emotional, never get tied to your properties and always keep your eye on the long-term picture.
Have your funds ready
On occasion you will come across property available in a relatively short time frame where funds are required almost immediately. While it does obviously make sense to have the funds available before you make an offer for any property, having the funds to hand for relatively short term opportunities can pay enormous dividends. Some potential sellers will struggle with cash flow, perhaps they are moving away or there is some other issue. The phrase “cash is King” is certainly apt in this situation because money does talk.
Stay within your limits
Whether you are buying a property at auction or you are in direct communication with the seller (or their representatives) it is vital that you stay within your own financial limits. In many ways this particular personality trait is heavily connected to the “never get emotional” paragraph from above. The simple fact is new properties appear on the market each and every day and while it may be disappointing to miss that “dream investment”, like buses, there will be another one arriving very soon. One overstretched purchase could in a worst-case scenario bring your whole property investment portfolio crashing down around your ears.
Stay cool, stay focused, stay within your limits and be realistic when making offers. Taking emotion out of any investment decision, whether property, shares, etc is vital because you need to let your head rule your heart where money is involved. Just one overextend property purchase could have a serious impact upon your overall property portfolio/finances going forward.