Historically, property as an investment has outstripped all other forms of investment, mainly because an investor feels that he has more control over it. The property market in the United Kingdom will continue to grow for reasons such as demand being higher than supply, the high birth and divorce rates, immigration numbers, and the fact that property investment is now seen as a good alternative to a pension.
TV shows and the general publicity around property development depict the industry as an easy place to make money, but if you enter the industry blindly, then this most certainly isn't the case. Before jumping in with both feet, it is essential that property entrepreneurs do their research and don't just rely on what agents or sellers say - remember it is their job to sell!
Currently, property hotspots in the UK include Hull, Ramsgate, Bradford and Brighton. According to Halifax Bank, Brighton is the city that has shown the strongest house price growth per square meter over the last ten years -- a 280% increase. This is due mainly to its large student population and its appeal to young professionals -- it is within commuting distance to London and its location is near the beach and sea. The property industry is a difficult one to crack, so here are my top tips for getting started:
- Don't get drawn in by marketing hype. Carry out all research yourself on the property, the area, the rental market and resale values. The Internet is a useful research tool to find information on local areas and property price trends.
- Always set out your property investment goals at the beginning. That way, you can plan on how you're going to achieve them.
- Never get emotionally involved in a property. Always remember you're investing to make money and not to live in the property yourself. Keep décor neutral, keep carpets dark -- they will last longer and just because you would not want to live there, it doesn't mean others wouldn't.
- Always look for a positive monthly cash flow as well as capital growth. Capital growth doesn't always happen overnight. Before you decide to lease property, speak to the local agents (especially leasing agents), and find out how much rent they can demand for this type of property. Find out from the agents what types of tenants it will attract, then ask yourself if this particular property makes a sound investment. Make sure you are aware of the leasing laws and regulations in the area, i.e. if the property needs to have work done to it to meet regulations such as licensing, this can be quite costly.
- Never overstretch yourself and allow a contingency budget for unforeseen costs such as maintenance, void periods and most importantly, interest rate changes.
- Transport links are very important. People will always need to travel and as house prices are on the increase, people will look to commute and therefore, transport is key. Look for bus stops, motorway links and train links.
- Good local amenities such as shops and schools are important. The opportunity to zip into the local shops or to be within a short distance of your local school for your child can be very important and people are attracted to these areas more than remote locations. Not everyone has a car. Many people walk or rely on public transit and therefore the closer they are, the better.
If wannabe developers follow these simple rules, then the property industry can provide a lucrative return on investment.
Property Investment Portfolio
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