Property investment is an excellent way to get a return on your money – and it’s an attractive area for investors all around the world. It’s no surprise, in all honesty. When you buy bricks and mortar, it can be a lot easier to understand than stocks and bonds that you never get to see, or the complexities of FOREX trading.
That said, just because it can bring significant returns, it doesn’t mean property investment is easy. We’re going to go through the basics with of getting started with you today, so read on to find out more.
Why invest in property?
One of the primary reasons people invest in property is that, in general, it is far less volatile than other investments. There are several areas you can benefit from, too – rental income and capital growth immediately spring to mind.
There are tax advantages, too. And think about the uncertain future of pensions increasing around the world. Buildings and homes are tangible assets that you can cash in for a healthy retirement.
Any problems?
Of course – as there are with any other investment. If you are renting out your property, for example, there are many things that can happen that will reduce your profits. And, you may even have to pay money to cover your costs.
A small increase in interest rates can mean your mortgage payments go through the roof. You will also be limited in what you can do in response to the local rental market. Plus, you never know when the value of property will dip – take the financial crisis of 2008/9 as a prime example.
What is the perfect property?
There is no such thing as the perfect investment property, but there are a few rules you should follow. First of all, only ever invest in a market that you understand. Renting to private tenants is the easiest start, but you should look into all the rules and regulations that apply. You should also look into areas and locations where there will be high levels of growth.
Up and coming areas will give you your biggest returns, although they can be hard to spot. Regarding what to look for, we recommend going for a high rental yield, in a city or area with a growing population. Long-term expectations of the local property market are also helpful, but you can’t project too far into the future.
Managing your property
Our last point is an important one – managing your property. A lot of people are surprised when they find out just how hard this part of the process can be. You can use a management service if you are short on time. Take The Peak apartments as a good example of what to expect. Most of your issues will be taken care of – although, of course, you will pay for the privilege.
If you decide to go it alone, there is a lot to think about. Insurance, repairs, renovation – it all adds up and eats away at your returns. It is essential, then, that when you set your rental prices, you have enough to cover the difference.
Good luck with the property investment – and let us know how you get on!
Image Credit: John Morgan
