Gaining financial security is the main reason why most people turn to property, which is no surprise because property has been – and continues to be – one of the most solid investments around.
Investing in property represents the best reward versus risk investment you can make for you and your family. It’s commonly known that pensions are giving poor returns, so whilst other investments are failing to deliver, property investment the UK and overseas continues to grow.
Property in the UK has doubled in value on average every 8.2 years since 1946 (when the average house price was under £1,500!) and some overseas property hotspots have seen an average 15% annual growth in recent years. Deciding whether you want off plan, key in hand, renovation or auction property are all important decisions to make when it comes to building an investment property portfolio.
For most of us, it’s the only investment we have ever made any significant money from; and we all have friends, family or neighbours that have or wish they had done the same. We’ve seen our own property and the properties around us go up in value and continue to do so and comments like ‘I wish I had bought five years ago’ are commonplace.
It’s all about finding the right property for the right price at the right time. Here’s the main reasons why people invest:
• Legacy – to leave something tangible for your loved ones
• A comfortable early retirement
• To increase current wealth status
• To supplement or replace a pension for later life.
Understanding your needs
The simple fact that you’re even reading this feature shows that you’ve realised that you have to do something to secure your future. You’ve also hopefully identified that property is your solution so you need to start asking yourself some questions like: who do you turn to? Who do you trust? If you don’t have the expertise yourself, how do you find out how to do it? Who has the time with full time jobs and busy lifestyles?
It’s time for you to take a closer look at your circumstances to figure out your needs. After all, there’s no point buying a buy-to-let or a renovation project if you simply don’t have the time to dedicate to finding tenants, doing DIY jobs or project managing.
Apart from deciding how much time you can spare, looking at your finances is another fundamental need. Whether you’ve got savings, plan to use equity from your current property or get a loan, your ability to raise funds will determine your overall strategy.
All developments have an entry price. This price obviously varies but for off plan it’s usually a percentage of the overall purchase price until the property is complete. For key in hand properties an administration fee secures your reservation then the remaining funds will have to be sourced pretty much straight away.
Devising your entry strategy:
• Financial situation – where can you source funds from, how quickly and how much?
• Time – assessing other work/life commitments will help you figure out this part of your strategy.
• Timeline – are you starting or building a portfolio? How long do you want to keep it?
• What’s most important, regular income or longer term capital growth?
• Type of property – off plan (not built yet), key in hand (ready to move in to), renovation (DIY projects)
• Usage of property – holiday lettings, residential lettings, personal etc.
• Size required – who’s your target market? i.e. if you’re planning to rent your property out to families on holiday don’t buy a one-bedroom apartment.
Devising a strategy is essential and a reputable company should provide you with the help and support you need if required.
Once you’ve established your requirements, it’s time to move on to finding the best investment deal – always remember, though, that property investment is a head decision and not one for the heart, so finding the most financially savvy deal is the key.
For more information please contact Equity Property Portfolios by visiting http://dentistry.co.uk/equityform/
Don’t miss part two in this series next week.
Anne Kelly is the editor of Equity Property Portfolios.