If you are looking to build long-term wealth and diversify where you place your money, careful planning and consideration must be taken into account before you jump into property investing. There are some different ways you can invest in property to gain financial returns, from BRRs and Flips, HMO investments, Rent to Rents, and even commercial property, these are just umbrellas for the many avenues that can be taken for investors. Before you start investing your profits there are many factors you need to have mapped out before you potentially make a rushed investment. 

For first-time investors, having the following points covered to secure your finances is essential if you wish to reap the highest rewards. There is no perfect property investment and they will all be accompanied by risk, but setting out the foundations before you invest will guarantee your security no matter what happens.

Pay Off Any High-Interest Debts 

First things first, it would be in your best interest to pay off any high-interest debts before you start putting your money into property. In some cases, for example, building your credit score, it might be best to pay your debts off over time to show that you can borrow and pay back the money. However, if you are about to start making high expenditure investments then it would be best to pay off any large interest debt before you do so. You will be losing more money, in the long run, the longer you leave your debts to accumulate interest. Pay off any outstanding, high-interest debts, and then use the time to grow a secure pot of money purely for property investment purposes. It might mean that you have to wait a longer time to begin investing, but you can always start small and slowly build your investing pot whilst you are grasping the knowledge for investing.

Audit Your Current Income and Outgoings 

Carrying out a full financial audit of your current expenditure and income is essential if you are looking to begin investing. There is no use investing if your monthly expenses exceed what you can afford, so be serious and get transparent with your current habits. Start by looking at your entire monthly and yearly income. This should include your wage, any additional finances you earn from side hustles for freelancing roles or any savings funds you currently have. Next, it is important to review your expenditure. This is the hardest one to cover, but you need to be honest. Look at your bank statements from the last 3 months, and categorize each cost into a genre. Make each genre as specific as possible, from essential bills to cosmetic products, work out the average monthly costs and keep that in mind when factoring in the pot of money you will be investing.

Have a Financial Goal in Mind

Next, you need to have your financial goals in mind. Investing shouldn’t be done mindlessly. Have your financial goals set, and keep in mind your intentions for the future. Having set goals for the long term and the short team will allow you to have an actionable road path as to how much money you hope to earn across each investment. Be realistic. If you are only looking to invest a small portion of money into one property strategy, do not expect to have thousands of pounds within a few months. Give yourself a goal as to how much you want to be earning from your investments, and how much you can invest, and strive to diversify your investments to prepare for any losses that may occur.

Decide Your Areas for Investment 

It is recommended to have a financial advisor that you can trust before you rush into any property investing. They will tell you where it is wise to put your money, and as and when it should be moved from each asset. Do your research into different property investment opportunities, but avoid being influenced by the masses of misleading information that is circulating on the internet. For example, if you are interested in property developments, you might take part in crowdfunding to support development projects if you can’t afford your own developments. Or, if you have a large sum of money to spend with a lack of knowledge, you might consider paying for a motor to guide you through the journey and help you grow your assets and experience within the industry.

Avoid Trusting Strangers With Your Finances 

Finally, make sure that no one unsolicited has access to your financial accounts and information. Property investing is a risky strategy that a lot of people can gain immense rewards from, however, the smartest investors are always prepared to face loss, and more importantly, potential scams. Financial scams are rife, and when you start reaching out to other investors for help and advice, you will find a percentage of them to be fraudulent. Never share your finances or personal information with outsiders when investing, and make sure all of your accounts are secure with passwords updated before. If you do opt for help from financial advisors and accountants, make sure they are compliant and regulated to be able to conduct the work they are doing. Investment fraud lawyers may be able to support you if you find you have been scammed out of your finances in any way.

Bottom Line 

Overall, investing is something we should all start doing no matter how much capital we have to invest. You can start small, and benefit from long-term rewards that are available within property investing. If you are new to property investing and do not know how to prepare as a beginner, you need to ensure all of your high-interest debts are paid off, your finances are in check, and also configure your financial goals for the short and long-term before you rush into anything.

Leave a Reply