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A guide to investing in PropertyWe have put together some information about investing in property that we hope you find useful. Please scroll down to find general information about: - Investing in property
- What would make the perfect property investment?
- UK vs overseas investments
- which country?
- what to look for when choosing location
- where to invest: investment risk
- Researching a potential investment property
- your views - a chance to ask the experts or offer opinion
Investing in PropertyBefore investing - some questions to considerWhy are you investing in property – eg income generation or capital growth? What type of property investments appeal – eg long/short term buy to let markets, refurbishments, renovations, off plan? What type of property – eg houses, flats, apartments, villas? Where are you looking to invest – eg UK or overseas (Spain, France, Cyprus, Italy, Turkey or others? What is your time scale? Remember, there's no such thing as a get rich quick scheme! What is your attitude to risk? What is your strategy? What is your exit plan? What is yourbudget and how are you going to finance the investment?
The best investment properties come with low entry costs [deposits and/or purchase costs], rental guarantees, below market valuation purchase prices and/or other packages that appeal to an investor.
Selecting an investment property should always be a rational decision based on how the facts stack up and other important factors such as how much money can be made and what’s the exit strategy?
The decision shouldn’t be based on price alone nor on a recommendation of a friend/relative who say’s they’ve made loads of money on a deal! This may be true or it may be exaggerated but either way, what was right for them then may not be right for you now.
‘we often hear of people who have invested in property because it was cheap/affordable without any consideration as to why it was cheap – this is a very risky strategy and can lead to a bad investment – we are here to help you make the right choice and consider all the relevant/ factors such as rental and resale potential before you make your decision.’ What makes the perfect property investment?Well maybe something like this: · A low deposit required so there’s only a small cash call for the investor · An “off-plan” purchase in a rising market for a period of equity gain · Good mortgage rate relevant to the local market · Good capital gain forecast · Rental guarantee period that covers all outgoings · Excellent rental demands · Buoyant re-sale market · Realistic exit strategy to sell or refinance · Ability to extract cash for re-investment at any time.
UK vs Overseas Property InvestmentsSome investors prefer to keep their investments in the UK as its familiar; the system is known and the mortgage market is, relative to many countries, advanced. Others see that rising interest rates and prices of property investments in the UK make investments in overseas property a sound alternative. Attractive interest rates and overseas property prices continuing to perform well shows that the property market is ripe with opportunity for investors to make substantial wealth from overseas property However, it is not simply buying a property that creates wealth…it is careful research and consideration of many factors to sources good investment property deals.
Which country?Location, location, location! Each country has its good spots - and its bad spots - and each country has its own laws regarding property investments and each location has its own merits and possibly concerns, which all need to be taken into consideration - amongst other things -when investing in property; whether it be property investments in the UK or investment properties in France, or Spain, Cyprus or Italy etc. We are very often asked which country's the next 'hotspot' or the best place to buy an investment property but the answer is so very difficult as it depends on an investors own investment objectives and preferences and answers to those questions listed above. There is no one single country, or region within that country thats best. The answer often also needs to take account of an investors' attitude to risk - and by risk we mean an investors attitudes towards emerging markets or well established markets. To give an idea about risk emerging markets represent high risk, well established markets low risk (scroll down for more) What to look out for when choosing a location for investmentWithin each country there are good - and bad - areas for investment. Do not buy a property simply on the basis of price. As in the UK, there are some areas that have lower property prices than others - and very often for a good reason! The same applies to Spain, France, Cyprus, Turkey etc - don't let the sun erase good judgement! Yes, property prices are, generally, lower overseas than in the UK but you must still look at comparables and do the research into the fundamentals of the area. Keeping abreast of local developments in the regions we operate, helps us to put forward a case' for why we think a location makes a good location for property investment. For example Murcia and the Costa Calida, Spain. The Murcian economy is to receive an injection of 1000 million Euros from the regional government to energise employment and growth. For visitors to the region, investment in the infrastructure, industry, commerce and hotels, agriculture and water, homes and tourism is very evident. Also, Murcia has enjoyed above national average growth for the past 12 years and this plan has been created to ensure that it will continue to enjoy long term economic stability. More on Murcia>> Source: The Costa Calida Report - Issue 91 Large scale investment in an area and in its infrastructure and facilities by local authorities etc aimed at attracting more tourists will lead to an increased demand for property; residential properties and rental properties, and both by local employees and visitors. Thus capital growth and good rental potentials. Building of new roads, airports, sports facilities, hotels and resorts and the preparations by low cost airlines to service the region are all good indicators. For example the facilities available in the Mar Menor region of Murcia, Costa Calida, Spain are to be greatly enhanced by a new sports complex financed by the Department of Tourism and Consumption to the tune of 600,000 euros and the Mar Menor consortium by a further 300,000 euros. More on Murcia>>
Source: The Costa Calida Report - Issue 97 Where to invest: investment riskSome locations offer high risk with possibilities of high returns, others offer medium risk with a more secure, but slightly smaller return, whereas others offer low risk but a much safer and acceptable return. High risk locations include emerging markets where mortgage finance is usually not directly available to foreign investors. Medium risk locations include areas where foreign investment is more apparent and basic finance is available but resale/rental markets are young and not well established. Low risk locations have well-established markets and easily available finance facilities, often by UK banks, for foreign investors. Some issues that influence if a location is high or low on an investment risk scale are: security, economic stability, supply & demand, accessibility, local attractions, weather Which countries don't we recommend? Where there is an unacceptable risk for our clients eg No bank guarantees Doubts over land title Mafia/military control Unknown rental demand Growth driven by investors Instability Soviet influences remain Post war conflicts, e.g. Croatia Where price is the only attraction Mainly Eastern Europe In most cases there are better investment alternatives Researching a potential investment propertyThere are 4 main areas to consider when looking at the basics that are going to drive the capital growth: - the level of risk in a given region/country - the value of the property - is the value correct and supported by eg bank valuations? - the finance available - do property prices, buying costs and rental yields make it financially viable? - the strength of resale/rental markets
Do you have a specific question you would like to ask our panel of property experts?
Your Views What do you think about the current climate for property investing? Where do you think are good places to invest - and why? |
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