Property Investment Basics
Everyone is always looking for ways to future proof their finances, to improve their financial security or that nest egg for retirement. Property is a great way in which you can invest your money for financial return or future security. It’s always worth speaking to a fund manager and property developer such as Lincoln Frost.
You may need the capital or the courage to get going but once you have taken the plunge you may find your property project portfolio growing. This article will cover the basics of the three main ways in which property can be used to make money: property development, renovations and buy-to-let properties.
Looking first at property development. Property development is one of the biggest commitments out of the three, it is likely to require the most investment and hands-on time. That said the financial reward can be one of the most lucrative. Property development is the building and development of properties and as the developer, you will be responsible for the process. There are a lot of rules and regulations that you will need to abide by and you will need to be well versed in the legal requirements. You will also need substantial financing or be able to secure property development funding. Building and developing properties certainly isn’t easy or without risk but when done right it can yield one of the best financial returns.
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Property renovations are perhaps one of the most common methods of using property to make money and can provide one of the quickest results, especially when the property market is booming. Also, it isn’t necessarily an avenue that is reserved for development companies and is a viable option for investors with smaller investment pots to play with. Essentially you buy a property that is in need of renovation, complete the renovation works on the property and then sell the property at a profit. If you are considering embarking on your first renovation property it is advised you start small. Don’t take on a huge project if you are not confident with the requirements for planning permission, for example. Ensure you have all your costs firmly worked out and plan a budget with a contingency fund, plan for the unforeseen. Finally, don’t forget to factor in any tax liabilities you will have on the sale of your purchase.
The final option to consider is buy-to-let properties. This is where you buy a property for the sole purpose of becoming the landlord and renting the property to tenants. Again this can prove to be a very lucrative investment in both the short and long term. Before investing consider your goals, can you tie the money up for a decade or so while someone either pays the mortgage or your monthly income? Are you investing the money to make a long term return or do you need a return each month? The answer to these questions will determine whether you are best buying a property with cash (if you can) or a mortgage and then the type of mortgage you opt for; Be it repayment or interest only. These are all considerations you will need to make when buying a buy to let property along with your tax liabilities and of course the responsibility to fund the property should you be without tenants.
