Whenever you buy a property, and especially if you are buying from a third party (sourcer or agent), the most important thing you can do is proper Due Diligence.
You need to know the facts and figures stated are correct, and you can only do this by doing your own research.
For example, when you see an investment or buy to let property advertised for sale you’ll often see the potential or anticipated return or yield quoted.
However, you should never take this at face value. Instead you should ask yourself ‘How has this been calculated’ and ‘What has been taken into account in calculating this return?’
Often the return quoted is just the rent as a proportion of the purchase price. That’s fine as long as you understand that, and also that you understand that won’t be the true return to you.
When calculating the true return to you account should be taken of all of your costs including:
*The legal fees on purchase
*The costs of arranging the mortgage – these will include the lenders fee, valuation fees, survey fees, and legal fees for dealing with the mortgage
*Any finder’s fee charged by the sourcing company.
Invariably these costs are either disregarded by novice investors sourcing their own properties or, when they are buying from a 3rd party agent, they will be disregarded by the agent when quoting an indicative yield (return).
So, where a return is quoted, the actual return received by an investor and the quoted return will often be poles apart.
I’ll explain all in the video.
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
By the way, I’ve rewritten and updated my best selling eBook, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same.
For more details please go to: