Thursday, June 22, 2017

Principles Of Success In Buy-To-Let Investment: a Guide For Newcomers

Are you thinking about getting involved in the buy-to-let market? It’s a tempting scenario to scope out, for sure, but there are a few things you need to know before you take the plunge. Yes, investing in buy-to-let can be highly lucrative if you play the game right, but before you kick things off, you need to establish the rules.

With this in mind, we’re going to take a look at some of the principles of buy-to-let property investment. It’s a guide put together to newcomers to the scene, or those that are thinking that it might be a good route to take. Read on to find out more about the principles of buy-to-let success.

There are plenty of things you need to get your head around if you want to taste success in buying property of any kind, and the same principles remain whether you are buying a home, becoming a landlord, or taking on commercial property. The ability to spot an opportunity will take a while to learn, but there is plenty of information out there - as well as a raft of experts that are available to hire in almost every region of the country. So, the first thing to remember when it comes to buy-to-let properties is this: always do your homework. And here are some of the key areas you need to consider for your buy-to-let.
Amenities and infrastructure
The first thing to consider when looking for your first buy-to-let property is the facilities and infrastructure of the particular area you see as a potential purchase. But don’t make the mistake of focusing your search on locations with excellent infrastructures already. Look into public or private development plans, and see if new amenities are springing up in the locale. Also, find out what sort of people are moving into - and moving out of - the area. When states and the government decide to redevelop and regenerate an area, you will often find that you can pick up great deals and then raise your rental prices as the location becomes more popular.
Social demographics
You should also have an idea of who you want to rent your property to. There are pros and cons of every demographic, of course. Students tend to be easy to please, and you could maximise your term-time profits by creating single bedrooms out of big double or master rooms. On the other hand, you have to bear in mind that the property will be empty over the holiday periods, so you have to consider how you will manage to foot your bills. There’s the single, young professional market to consider, too. This demographic tends to want to live in bustling, exciting areas of town, which have excellent transport links for their daily commutes. But young professionals also tend to move on relatively quickly - you might have to keep marketing your property every six months or so. In this respect, one of the best demographics to go for is, without a doubt, young families. Parents want a secure and safe environment for their children and tend to want longer tenancy agreements. The only downside is that homes and apartments in popular areas with good schools and child-friendly amenities will always cost a lot initially. And you will need to charge your rent accordingly to ensure that you are profiting from your buy-to-let rather than losing money.

Employment statistics
It’s also important to learn about the local employment situation. When it comes to investing in buy-to-let homes or apartments, the general rule of thumb is that wherever there are high levels of employment, there are low levels of vacancies. And, to add a cherry on top, the rental rates you can charge tend to be a lot higher. Again, it’s worth keeping your ear to the ground on local development - perhaps you hear news of a major business starting up in the area, for example, or learn that a new road is being built that makes traveling to a major city a lot easier than it ever has been before. In either case, it should see the employment figures going up in the area over time, and it might be the right time to invest.
Landscape and scenery
No one likes living in areas that are dilapidated and run down, and as Vystal Property Group point out, it can often pay to invest in premium locations. But at the same time, buying property in leafy suburbs will come at a huge price - and can be risky when you are just starting out in the buy-to-let market. There are walking trails, country parks, and kid’s playgrounds to consider, too. Anything that lifts the appearance of an area by a significant margin is well worth investigating. But, as we mentioned before, the trick to a fruitful and profitable buy-to-let investment is to find sectors that are targeted for local regeneration projects, that turn an area in ill health into a thriving and attractive place to live. Not only will you be able to increase your return on investment in these scenarios, but you will also find that you can increase your rental prices year-on-year and turn over a more regular income.

Making a difference
As you can see from the principles listed above, there is a common theme to success in buy-to-let investment: it’s making a difference between the place that you buy and the property you rent out. Whether it’s a simple renovation, ‘fixer upper’ project, or due to local infrastructure improvements, the difference between your property on the day you buy it to when you start renting out needs to be significant. And in general terms, the bigger the difference, the higher rental prices you can charge, and the greater your ROI.
While investing in buy-to-let property is not rocket science, there is something of a learning curve. You should try and find help wherever possible, whether it’s doing your own research online or meeting up with other local property developers and investors. Good luck on your search and future in property investment!

3 Rules To Become A Better Investor

From Wikimedia

Learning to manage your money well, and develop an investment portfolio, can be a very difficult task. For many people, it’s simply about not having the time or resources to learn about all the different investment factors that they need to. For others, it’s more to do with their temperament and emotions. Though effective investment is never easy, there are certain rules you can follow to make yourself a better investor…
Keep Away from What You Don’t Understand
Many people find themselves investing in assets that they have very little understanding of, and wind up regretting the decision further down the line. Remember that there’s no specific kind of investment that you should be focussing all your energy on, regardless of what you may have heard elsewhere. If you’re given a tip on stocks for a company dealing with geospatial data, or genetic therapy, it might be a great lead. However, unless you’re prepared to put the time in to thoroughly understand these niches, it’s best to play it safe, and stick to industries and businesses you’re fairly familiar with. If the person who’ll be handling your investment can’t understand the underlying thesis – where and how the capital will be generated, and how that money will ultimately make it back to your pocket, then it’s usually best to walk away.
Don’t Concentrate Too Much on Performance, and Not Enough on Risk Exposure
Again, it’s a very worrying sign when brokers and similar professionals talk about the great returns you could be getting, without going into how those returns are generated. The risk that you’ll expose your capital to, measured in price paid relative to the intrinsic value of an investment, with an adjustment for the potential for failure, is the real thing you should be looking at when looking to build wealth. This holds true not only when you’re building a portfolio as a private investor, but in the management of entire companies. As a rule of thumb, make sure you’re only buying stocks or bonds which you’d be happy to hold onto for five years, even if the stock market closed and you wouldn’t be able to get a quoted, trustworthy valuation on it.
Get into the Habit of Thinking About Net Present Value

For any investor, net present purchasing power is a major contributing factor to their success. Don’t fall into the common bad habit of thinking in nominal currency. If you’ve got $100 cash in your wallet, the value of that paper depends on a number of different factors. If you’ve got enough time and you can earn decent rates of return, then compounding will run its course and turn it into $10,000. Smart investing is all about making smart choices. Start getting into the habit of framing all your spending and investing choices in this mindset. Remembering that money is a tool, and nothing more, can help you avoid one of the biggest investing mistakes there is: sacrificing significant, long-term desires for their less substantial, short-term wants.

5 Tips To Fast Track To The Top Of The Property Ladder

Getting a foot on the property ladder is a feat that most young people can no longer manage. Not only are you contending with finding a deposit for the house of your dreams, but you have to find the money for solicitor’s fees and stamp duties and moving costs – the cost list can feel a little endless!

Owning your first home is one thing, ascending the property ladder is a whole other feat. Trying to climb up from your starter home to luxury real estate is something that most homeowners can only dream about. With house prices rising and interest rates being low, the market has been quite bad for first time buyers. However, it’s not much easier for those hoping to climb another rung or two up the ladder. There are ways, though, that you can climb the property ladder quickly and start building your own property empire:

  • Deposit. As with any home, you will need a deposit down so you have to step up your working game and get one set up. However, if you have an inheritance that you can invest in the deposit of the next house, you should absolutely pour that money into it. Saving for a deposit while already paying for a mortgage isn’t easy, but you managed to do it once before while renting so you can do it again!
  • Overpay. Check out the conditions on your mortgage – if you are able to add more to your monthly repayments and pay it off faster, this should be an option for you. The more you overpay into your current mortgage, the more equity you will have when you sell. If you’re unable to do an overpay without penalties, then add the money you’d overpay with to a savings account with a good interest rate instead.
  • Cuts. Making cuts in your day to day living expenses – such as swapping the car for a bike to work – can help you go a long way to saving a house deposit. The costs of buying and selling houses do mount up, and if you can cut down on those costs by doing most of the legwork yourself (such as advertising etc) then you can help yourself when it comes to the sale.
  • Relocate. There is an obvious price difference between where you live now and say, further north of your area. You can save on costs by buying in a cheaper area – this means a lower deposit and less in terms of fees. You could compare the costs of houses in your current town with houses in another area, and go for the cheaper option to be able to climb the ladder faster.
  • Wherever you decide to go to expand your property portfolio, the goal is always to upgrade. Look for the best deals you can in different areas so that you can better your current situation. Of course, if you need to downgrade your property as you don’t need so many bedrooms anymore, that’s a very different situation!

Wednesday, June 21, 2017

Why Investments Are the Best Route to Saving Your First Million

Earning your first million is an incredible milestone. It feels like you’ve accomplished something incredible in your life and that you’ve gained entry into an exclusive club that very few people are allowed entry into. Seeing those seven digits when you total up your assets and savings will fill you with joy, but until then, you’re probably stuck working a silly job and trying your best to scrape by from paycheck to paycheck.

Let’s face it, as much as we dream, it’s difficult to actually earn that first million because we don’t know how. This guide is here to tell you that if you want to make your first million, you need to break away from the shackles of a typical working life and start investing your money.

Why working is a difficult path to your first million

One of the issues with your typical day job is that you’re limited in how much you can earn. Let’s say you work a 60 hour work week and earn $30 per hour. That would be an estimated $93,600 salary per year. Now let’s divide a million and we end up with around 11 years. If you saved every single penny and didn’t spend anything for 11 years, you will have saved up a million dollars. Now let’s bring it back to reality and realise that you can’t realistically save up every penny because you need to pay for rent, taxes, utilities, repairs, food and so on. What you end up with is a small fraction of that money that you can actually save up. Sooner or later, you’ll realise that working makes it almost impossible to save up a million dollars, and you need to break away from your job in order to get it.

However, let’s use another example. Let’s say you are on the higher end of the spectrum. According to this article, one of the highest paying jobs in the United States pays out roughly $246,320. If you saved up every penny, then it’d take a little over 4 years to accumulate a million dollars in total earnings. Not too shabby. But again, much of that will be taxed, a lot of it goes to rent and other necessities, and you’ll end up spending well over a decade in order to save your first million dollars. Not to mention the job itself will be taxing and requires years of study and practice in order to reach that level.

Let’s also not forget that 60 hour work weeks are incredibly tiring, and that’s considered the lower-end of the spectrum. You won’t have as much time as you’d like to spend on yourself, you can’t really indulge in holidays or luxury purchases, and much of the money you save will eventually be used for nothing. Long story short, working is perhaps the worst path to saving your first million because you’re limited by the amount of income you can earn. Even if you work extra hours and you’re paid a generous hourly wage, you’re still restricted with how much you can earn. In order to break out of these limitations, you need to look towards investments.

Why investing is the better path

One of the first benefits of investing is that there’s no cap on how much you can earn. With a job, you’re limited by how much your employer sets and even if you work extra hours, you can only earn a little more than the standard set. Even if you wanted to work 100 hours in a week, you’re still going to have an upper limit on how much you can earn, not to mention how much effort that’s going to take. With investments, you could technically earn an entire year’s worth of your current wages in just a single week—and that’s not an exaggeration! Your business could potentially be worth millions or even billions if you put in the time and effort to nurture it. Just take a look at famous CEOs such as Mark Zuckerberg who currently has a net worth of around $63.8 billion. Facebook was founded in February of 2004, so it’s taken roughly 13 years for Mark Zuckerberg to reach that level of fame and fortune. Most people are lucky enough to even earn a slice of that in the time he has spent growing Facebook, and it just goes to show that investments really have no upper limit for income.

In addition to having no income limit, you also have no real constraints. Unlike a regular day job where you work from 9 to 5 or similar hours, investments mean you can pick and choose when you work. This has two advantages. Firstly, it means you can set when you want holidays and you are never restricted to a schedule. Secondly, it means that if you do need more money or want to work harder, your efforts aren’t wasted. It’s not uncommon for investors to spend more hours than a regular job analysing and planning their investments but it also means that once you’re settled into the industry, you can continue making money without much input at all. It really depends on what kind of business you run, what kind of investments you make, and the types of income you are earning. For instance, owning a block of apartments means you simply collect rent and occasionally deal with tenant issues. However, owning a business can be a lot more work since it requires a certain level of dedication and commitment to ensure it’s running optimally. If you simply just trade shares with your investment money, then there’s less work required but the more you know about the industry and the more news you look at, the better your chances of success.

The best types of investment to get involved with

There are three main types of investment that are easy to get into without too much work. Granted, it still requires a lot of research and understanding, but not as much as some of the more financial methods of investment.

First of all, property development is a form of investment that many people can get involved with because they have an understanding of how property works. You simple look at a new house for sale, renovate it, then sell it for more money. It requires very little input assuming you have the money to hire contractors and designers, and most of it is handled by estate agents. However, the more work you put in yourself, the less money you have to pay third-party services and the more profit you earn. Fortunately, as long as you still make a profit even while hiring other people, you can continue buying and selling property in order to make money.

Another popular form of investment is in stocks and shares. You essentially pay money to own a small portion of a company and whatever profits they make are split with you depending on how much of a company you own. The profits might be small to start with, but they can grow exponentially depending on how well the company is doing and how much of a share you have. This requires a lot of research and a deep understanding of how your chosen industry operates, but the potential for income here is staggering.

Whatever form of investment you pick, make sure you’re doing your best to research it thoroughly. Making your first million is difficult and requires a lot of hard work and dedication, but you can get a head start by learning about investments instead of struggling at your day job.

Friday, June 16, 2017

The Super Savvy Guide To Personal Finances

Think of all those years ago when you were in school – can you see your younger self studying hard like a model student? Yep, but what you can’t see are the life skills that will help you in later life. Fast forward a decade or so, and all the maths and science facts don’t come in handy when your finances are going down the drain.

The truth is that the education system doesn’t help young people learn about life skills, the ones that you can’t find in a textbook. As a result, even the cleverest people are pretty dumb when it comes to their finances. It's obvious that no one wants to suffocate under a mountain of debt, so you need to find a solution.

Thankfully, there are several ways to get savvy and stay one step ahead. All you have to do is continue reading.

Reach Out For Help

Later on, this post is going to focus on your responsibility as an adult to maintain your finances. But, it’s worth noting that this isn’t a path which you should walk alone. Sure, it’s your money and you can do with it as you please. Still, there is no reason not to reach out to people with knowledge and experience. For one thing, you’re novice who is going to make mistakes. In the field of finance, one error is enough to last a lifetime. Plus, the Web is full of people like Michael Banks and experts that want to help. All you have to do is take the time to reach out to them and listen to their advice. It could make all of the difference.

Stick To The Basics

Beginners in any field always assume that the best in the business do things another way. They do, but not in the way you would think. Simply put, they adhere to the basic rules of finance and always make decisions with them in mind. There are no secret tricks or Hail Mary passes because that isn’t the percentage play. So, they do things like spending less money than they earn to stay in the black. And, they squirrel money away so that they have a safety net in case of a rainy day. But, the greatest play they make is to adapt with the time. There isn’t a one size fit all policy, so you have to evolve with your finances.

Make Wise Investments

The biggest issue with money is that there is never enough to go around. If there were, you wouldn’t be here reading this post. The simple solution is to make more of it, but money doesn’t grow on trees. So, what is the middle ground? The center ground is to take some of your excess money and invest it invaluable commodities. A sound investment will make you money while you sleep and supplement your current income. A great one could make you enough that you never have to work again. Just look at Warren Buffett if you’re skeptical. There is no point in money sitting in a bank account accruing nominal interest. Instead, find a lane and take a calculated risk.

Be Alert

People’s finances plunge into the red for one fundamental reason: they lose track. Ask anyone you know how much debt they are in, or the rate of interest on their credit card and they will struggle for an answer. Ask them who won the soccer World Cup in 1958, or which celebrity couple has just split and they’ll have a reply, though. The sad reality is that the average person isn’t alert enough when it comes to financial issues. If you’re one of these people, it’s time to study. Call your creditors and ask them for any info, and then use it to plan your next move. Or, consider consolidating debts into one payment. That way, there is only one arrear to juggle at the end of each month.

Plan Ahead

Staying in the present is a big part of maintaining healthy finances. After all, anything can happen if you take your eye off the ball. Still, it’s vital that you glance in the future’s direction once in awhile. Quite simply, personal finances are a long-term game. It doesn’t matter whether you have a grasp on them now because it is how you fair at the end of a day's play that counts. With that in mind, try and stay ahead of the curve. If you see something coming, don’t be afraid to check it out and see if it’s a viable option. Also, don’t be scared to scrimp and save in the short-term for better traction later on in life.

Don’t Dismiss Options

There are certain techniques that plenty of people rule out for one reason or another. A credit card is a perfect example. Because you are scared, the idea of using a small piece of plastic to regulate your finances seems foolhardy. In fact, ‘seems’ is an understatement as you may have the horror stories to back it up. It’s true that card companies are the reason why a lot of people that find themselves in debt. However, they aren’t blameless. Without sounding crass, these people just don’t understand the dynamics of a credit card, which is why it bites them on the ass every month. As long as you’re savvy, there is no need to tear out your hair. The trick is to pay off the full amount each month unless there is a promotion. If the card has 0% APR for 12 months, there is no need to rush. Just make sure it’s paid off by the deadline, or transfer the balance to another card. What you should never do is rule out a legitimate tactic just because you have heard some wild rumours. As always, plenty of due diligence is needed before you make any decision. Otherwise, the risks are huge and not worth taking regardless of the opportunity, or lack thereof.

Hopefully, these tips will help you when you need them most.