Property investment is not complicated, but it is unforgiving of unpreparedness. This guide sets out the sequence we take first-time investors through, and the points at which most people go wrong.
Start with the objective, not the property. Are you investing for income to supplement earnings now, for capital to fund something in fifteen years, or for an asset to pass on? Each answer points to a different city, a different property type and a different financing structure.
Understand the full cost of entry. Beyond the deposit, budget for stamp duty including the additional property surcharge, legal fees, survey, mortgage arrangement fees, furnishing and a contingency of at least 5% of the purchase price. New investors routinely underestimate entry costs by 8-12%.
Decide on structure before you buy. Purchasing personally or through a limited company has significant tax consequences, and changing later means a second set of transaction costs. Speak to a property-specialist accountant before you reserve anything.
Choose the market before the property. A mediocre property in a strong location outperforms an excellent property in a weak one over any meaningful timeframe. Research tenant demand, supply pipeline and employment before you look at a single floorplan.
Model conservatively. Assume a void period, assume maintenance, assume a higher interest rate at refinance. If the investment only works on optimistic assumptions, it is not an investment — it is a bet.
Finally, plan the second purchase while making the first. Portfolios are built by design, not accident, and the structure of your first acquisition determines how easily you can fund the next.