Martin Bikhit, MD of Kay & Co, has met numerous investors over the past 20 years. Many have gone on to establish their own property portfolios, while others have taken the renovation route to move up the property ladder.
Here Martin reveals seven traits that many of the most successful investors have possessed over the years.
1. The ability to sniff out a gem of a deal
The best investors are commercially savvy. They keep their eyes peeled for places that have just come onto the market, or even properties that are likely to be put up for sale. They make sure that their local estate agent knows that they are looking and are ready to buy.
They will compare prices in the area to find out the average rents or price per sq ft. Sellers like buy-to-let investors as they can usually move fast and don’t have a chain to slow things down. A smart investor will use this to their advantage to secure a great price for the right property.
2. Number crunchers
Savvy investors pivot the numbers for a successful renovation project. They might see a flat for a bargain basement price – but factor in solicitor’s fees, mortgage arrangement and surveyor’s fees, stamp duty, refurbishment costs and interest on the loan.
When they calculate how much it will cost to renovate the property, investors will build-in a contingency. If they are buying to move up the property ladder, they might live in the property as they do it up. It’s not pleasant if there’s no heating or lots of dust, but it will save money later.
A smart investor will have a vision of how the property will look when finished and understand how to add value. It could be a house crying out for an extension, or a flat that needs remodelling to create more bedrooms or an extra bathroom. They will spot that all the neighbours have an extra storey. And they will know that behind the tired wallpaper, there are period features waiting to be revealed. Canny investors look at the space available, the layout and the flow, but crucially, they look at the potential.
4. Ability to read the market
An experienced investor understands what the market wants. It does not matter what they like or dislike – they think about their target audience.
Consider the type of house and type of tenant. If it’s a three-bedroom house, look for a family to rent it. Factor in local schools as well as local shops and cafes. For example, Connaught Village has a family feel with lots of local shops and cafes with larger houses. Marylebone might appeal more to young professionals wanting to rent or buy studios and one-bedroom flats in the area.
The ability to read the market also includes one other key characteristic: good timing. It may come from experience or sometimes luck, but they are able to judge the movements of the market.
5. Determination to stay on track
It’s easy for a developer to become disheartened. They might begin with enthusiasm, but soon problems may emerge, determination to stay on track is key. The best developers keep their eye on the-end result and keep going.
6. Project management skills
Smart investor will draw up a clear timeline for refurbishments, but keep it flexible as things often change. Each job has its place in the timescale. There’s no point replastering throughout, then finding you need to rewire.
They will factor in the weather to ensure everything is carried out on time and in budget. Roofs and windows are best replaced in the summer, while paint simply won’t dry in really cold weather. Plumbers will be busy with boilers in winter and gardeners snowed under in spring. A smart investor will build a strong team of designers and builders to ensure the work is carried out to a high standard.
7. Common sense
Many of the best property investors over the years retain a sense of balance. A novice investor with newly-acquired DIY skills might purchase a new-build flat instead of a period property. A developer with plenty of trade contacts will search for a run-down building, then use their contacts to transform the property. In essence, a good property investor knows their abilities and has plenty of common sense to tackle projects that play to their strengths.
Property developing is not for everybody and it certainly should not be undertaken lightly. Houses may not be a liquid asset, but they are an asset that remains an attractive opportunity for many.
• Martin Bikhit, Managing Director of Kay & Co has more than 20 years’ experience in the prime and super-prime property sectors.
• Contact Kay & Co estate agents for details of properties for sale or to rent in Marylebone, Bayswater, Paddington, Notting Hill, Mayfair, Fitzrovia, Regents Park, The West End and King’s Cross (020 7262 2030; Kay & Co).