40+1 Tips For Property Investors

danubioHomes´ TOP TIPS FOR PROPERTY INVESTORS

1) COVER STORY

There’s an awful lot that can go wrong in the world, but if you own a roof over your head, you can cope with almost anything.

2) FIX THE FINANCE

Sort out exactly what you can afford —and what you will need to recoup in rent— before you start looking at locations and what type of property you can afford to buy.

3) GET A PLAN

Don’t go after what all investors are doing. Target your investment market, your tenant type and make sure it fits in with what you can afford in your chosen location.

4) GET OUT

Look for new opportunities in Eastern European countries like Hungary.

5) YIELD v CAPITAL GAIN

balanced property portfolio combines properties with more chance of capital appreciation and others that offer greater yield. In Hungary and especially in Budapest is very possible.

6) DO YOUR RESEARCH

When searching for the right buy-to-let property to buy in Hungary, get out on the streets and talk to people.

7) OUTPERFORM THE MARKET IN HUNGARY

A really successful property investor outperforms the market. That may be through adding value, or it may be because they have invested in something that will benefit from the infrastructure that is predicted to lift an area. Hotspots pop up if there are changes to the transport infrastructure or employment, or if a university is expanding by building a big new campus.

8) UNIVERSITY OF LIFE

It is more difficult buying in an area you don’t know well or is a distance from where you live. University towns like Budapest are good for investment.

9) STAYING DETACHED

Property can be a more emotional investment than others because it’s tangible. But if the maths work, you don’t need to be able to see and touch it. It will help you choose which property to buy if you are familiar with the area and type of property, but then you can leave it to someone else to manage and you don’t need to see it.

10) DO THE MATHS

It may be tempting to buy in the area you know. But remember why you’re doing it. It’s purely about maths and a commercial decision rather than what you like or know.

11) RISK FACTOR

Any form of investment is about balancing risk and reward – and the risk is greater if you don’t know what you’re doing.

12) GOING STEADY

I understand the need for income in retirement, but remember you are tying up cash in an asset that is fairly illiquid. It is a good, steady income, though, and it’s an investment you feel you can control.

13) LOCATION IS THE KEY

Location is key factor in Budapest— you need to have a good understanding of the market in a specific area.

14) CLASS ACT

Commercial property is a more complicated proposition than residential property in Hungary. If you get it right, you’ll get an attractive yield. But you need to know what and where to buy and the usage class – if it has a license to sell food, for example. That can make a big difference to your rent.

15) PLAY THE LONG GAME

Buy for the long term and finance carefully.

16) FAR SIGHTED

As an individual investor, you need to ask yourself whether you can manage a good opportunity in a town that’s a long way from where you live.

17) EMPLOY EXPERTS

If your investment property is a long way from your home like in Budapest, you need an agent who will manage your property. A solid company like danubioHomes is an excellent choice.

18) NEW BUILD

Buying new-build is the easiest option in Budapest as it comes with a new lease, a management company who will take care of everything.

19) IDENTIFY YOUR TENANT

Have a clear strategy about why you want to invest and what you are going to be investing in. Research the characteristics of the tenant market you target.

20) CORPORATE TENANTS

Corporate tenants are more reliable and longer term. They are also likely to take properties other tenants might not take.

21) LOOKING GOOD

A clean property will appear in a better state of repair, making it far more appealing than rival properties to tenants.

22) FURNISHING

The costs of decorating and furnishing hit you at once so they need to be budgeted for carefully. If you don’t do it properly, you won’t get the right tenants.

23) DO NOT OVER-FURNISH

Resist the temptation to over-furnish or overstock the property. Ask yourself how much these additions will add to the rent.

24) VALUE FOR MONEY

You should furnish and decorate an investment property to a level that matches the property’s value. But there are certain features that most tenants will want these days such as a dishwasher and a washing machine. Don’t assume you can furnish with items you’ve kept stored for years. The property must be clean and it must feel like a home rather than an investment property that you don’t care about.

25) STREET WHYS

If road noise is a problem, swap the rooms around, shifting bedrooms to the back. There’s no reason why, because a room is a bedroom when you buy the property, it can’t become the dining room if that’s more practical.!

26) DARK ART

If overgrown trees are blocking out light, trim them or even remove them if you are allowed to. People want to rent homes that are light, bright and clean.

27) TWO BEDROOMS + TWO BADROOMS

If you’re in the two bedroom flat market, two bathrooms are much preferred. Ideally, the bedrooms would be of a similar size and set apart from each other.

28) AIR THE BATHROOM

Bathroom ventilation is important.

29) EMPTY PROPERTIES EQUALS LOSS

If the tenants haven’t looked after your property and you need to repaint and recarpet when they leave, suddenly you’re left with a month’s void.

30) DUD MONTH BE PREPARED

Tener un buen inquilino es un buen activo, por lo que debe cuidar de sus inquilinos atendiendo a sus necesidades lo antes posible y dando respuesta a sus demandas. En Budapest, tener una buena empresa de gestión como danubioHomes es esencial para poder satisfacer las demandas de los inquilinos.

31) DUD MONTH BE PREPARED

Include in your calculations one month a year as a void period with no rent collected.

32) LOOK AFTER YOUR TENANTS

Fix things as quickly as you can and respond pleasantly if they tell you there’s a problem. Fix the problem as soon as you can. You need to look after tenants these days as void periods are the killer.

33) SMALL PRICE

For the landlord, a long-term commitment to rent is good news and it does not mean your tenant pays less rent. If it does mean spending a bit on improving the property, it’s a small price to pay.

34) LUXURIES COST

Avoid high maintenance costs, like high Common Cost charges (gardening, swimming pool, fitness facilities… in small buildings).

35) PARKING

If you analyzed the extra rent you could charge for the privilege of somewhere to park, I’m not sure the price for a space works out favorably. But a flat will be more marketable with a parking space when you sell, if not necessarily for a let.

36) GOING UP

Parking spaces, like a lift, concierge or gym, are a nice bonus but may not command a relative rise in rent.

37) IN THE FAMILIAR WAY

Once you know a market and have a model that works, it makes sense to carry on with the same formula and build up a portfolio of similar properties.

38) CUTTING RISK

By having a portfolio of properties, you can balance out your risk. If one property out of 10 has a problematic tenant, the other nine can cover it.

39) BUY BUG

You can also create a nice investment by buying a whole building, converting two floors into flats – which you then sell – and letting out a commercial space on the ground floor. But you need money and experience to do it.

40) LONG VIEW (bis)

The economy and wider markets will influence the commercial and residential property market. Think that the property investment is relative illiquid.