Buying Investment Property
Buying investment property can be for you!
It's a great idea if you want to increase your asset base and to create more wealth in the future, then this subject is definitely for you and it's 100% relevant. If property values generally double every ten years, then the property that you're looking at in ten years time is half yours (deduct the mortgage and don't forget the Capital Gains Tax). The great thing is that you really don't need much to put down and get going.
It's all about risk and reward and no, I'm not a financial adviser so you'll have to go to someone else if you want someone to sue. This site exists to provide education and tools for you to get familiar with the concept of buying investment property and understanding the rewards and risks in doing so. But please, risking your family's money if you have not adequately researched, is not a good idea - so don't just rely on me!
Buying investment property is all about paying the mortgages on time and meeting your commitments. If you can work a spreadsheet, run a bank account and organise a party, then IMHO, you can make money in property!
You've seen the mortgage calculators, the cashflow charts and other property price projection tools as well as the link to the Halifax website for historical property prices. If you're still sceptical: Did you ever see a poor / struggling landlord? Who do you know have second homes? (how comfortable are they!) Have you read 'Rich Dad, poor Dad'? Have you heard of Donald Trump, one of America's richest property millionaires?
OK so perhaps you're now convinced and you want to go ahead and find some property. Well what makes for a good investment?
Simple, the one where you can buy at a discount. Usually all properties get valued by a surveyor for mortgage purposes when you buy a property. However, when you buy and the seller sells at a discount either because they're desperate or because they want to, then you'll get value and lock in a profit. Remember: THE PROFIT'S IN THE PURCHASE PRICE!
Also, profit can be 'generated': you can buy a regularly priced property and if it has development potential then that is also worthwhile. However, redevelopments are not discussed on this site but click here for further information.
What I do know about is off plan property investment. When buying investment property this way, there are discounts of around 15%, the properties are new and therefore very lettable, the demand would have been assessed by the developer beforehand and therefore has a low level of risk, there will be a (Royal Institute of Chartered Surveyors) RICS rental assessment available for mortgage purposes and many investors who will also be buying and hence safety in numbers!
Many specialist property companies and investment clubs offer buy to let off plan discounted properties - mostly they tend to offer the properties as well as finance to buy them. The way that these properties are financed generally involve you contacting the business, parting with £1000 reservation fee for a particular unit and then exchanging 28 days later and with a varying completion date: sometimes the build has been completed and at other times there's a long completion date - sometimes 3 years.
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