Whether you are an experienced landlord or looking at taking your first steps on the property investment ladder you are probably being advised to seriously consider investing with the “state of the market at the moment”
Is this a valid argument?
You have probably been told by a property investment broker or company that there is never a bad time to invest in property as long as you are in it for the long term. The reason for this is that statistically, over the long term, property prices have always increased at a rate of around 5% per year.
There is no doubt that making a profit out of property investment is a lot more attainable if you give yourself 10 years to do it.
If however, you are looking at making significant profit in the short term then you could be in for a shock!
If you are buying a property to live in the increase or decrease in property prices will not affect you as dramatically as someone with a large and highly geared portfolio.
If your family house increases in value £50,000 over 3 years and you decide to sell, don’t forget that unless you are downsizing, other houses similarly prices or higher priced have also increased in value!
There is no doubt at the moment that the market is on the buyer’s side. With prices of property down on average £5,000 last month and fewer and fewer buyers visiting estate agents, many buyers may be desperate. Couple this with interest rate rises and a lot more repossessions coming onto the market than at any time in the last few years, discounts off of property are most definitely easier to attain.
What steps can be taken to make sure you are in profit at the end of the year?
Due Diligence.
This is a word that has been used more an more frequently in property investment.
It basically means thoroughly researching your chosen investment.
This includes:
- Studying property prices over a sustained period of time.
- Making yourself known to estate agents and property investment companies.
- Making a list of questions that you need answered by any agent when looking at property, and making sure that they are all answered.
- Haggling, whether there is already a discount or not, if you believe the deal works at a higher discount, ask if there is any movement.
- Make use of various property investment forums , if you are looking at an investment in a certain development, potentially someone has got there before you and has an opinion! Simply type property investment forum into Google!
Many newspapers are predicting that interest rates will fall again, but try and work out your worst case scenario.
You need to know if you can afford to keep your investment over the long term. If rates go up you don’t want to be just another repossession case for the banks to deal with.
Remember, when house values increasing yearly you could afford to gear your portfolio highly, this is no longer the case for many people.
Make sure that you keep a decent amount of equity in your properties.
Following these steps should help you to invest! Good Luck!
ABOUT THE AUTHOR
Keith McGregor is a partner of Strawberrysoup, a web design agency with offices in Chichester and Bournemouth. Strawberrysoup specialise in creative web design, content managed websites, search engine optimisation, search engine marketing and graphic design. http://www.freshinvest.co.uk/
