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Five Golden Rules of Property Investing

02/06/2010

Rule 1 – Don’t be seduced by glossy, expensive looking brochures, websites or mailshots.

These prove nothing other than that the organisation has a wealthy advertising budget.

Rule 2 – Research the Company

Do as much research as you can before parting with any of your money. Search the popular property forums for the company and/or individuals names. I recommend Property Tribes or Singing Pig.

Contact the company by phone or email and ask for a call back (if there is no phone number, be suspicious) and ask a few questions. A genuine company will be glad to share information with you and shouldn’t hold back regarding payments, structure of financing etc.

Rule 3 – Check the track record

Don’t be swayed by lots of rich investors, it’s not unknown for endorsements to be made up!

In addition, the discounts mentioned in ads may only have been available for a short time and on limited numbers, they may also not have taken into account important aspects such as financing and refurbishment costs.

Rule 4 – As where the real profits are

You should be able to ask for comparable valuations in the local area and the basis of how these have been calculated. A good company will also be able to give you an accurate cash-flow forecast based on typical rental yields. What really matters is overall profitability taking into account your ongoing costs. Don’t rely on being sold on capital appreciation only unless this is your sole strategy.

Rule 5 – What aftercare service do they offer

If you must may a registration fee (or similar) is there a money back guarantee? Make sure that it’s not based on your ability to get finance (as many are) and is linked to the deal stacking up to valuation and the due diligence being confirmed.

Will the company continue to work with you after the deal has completed, providing ongoing advice, assisting with the appointment of a Letting Agent, Tradesmen etc

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