Posts Tagged ‘property investing’

In our A to Z of Property Investing we’ve reached G – and G is for Goals. If you’re involved in the business of property investing, then it helps to have goals. Goals give you something to aim for and a target to work towards and can help keep you focused through good and bad times.

When you’re thinking about what goals you may like to have, it helps to consider them in terms of short-term property investing goals, medium term and long-term goals. In the short-term, your aim may be to purchase and let two properties, keep them going well and see the value on the properties rise. In the medium term, you may be keen to buy another two properties, to double your earnings. In the long-term, your goal for the future may be to build up a property portfolio of 20 or more properties.

It goes without saying that most people aren’t in the position to pop out and buy 20 properties outright – it takes time, commitment and effort to build up to that stage. If you were just starting out and only had one goal – to own 20 properties – it may seem rather far off, so having smaller goals along the way can help maintain your motivation and give you other, more achievable, milestones to reach.

Other smaller goals can be set on a monthly, half-yearly or yearly basis and can involve anything from putting a certain amount of money aside for future investments, to gaining new tenants for your properties. If you want to be reminded of your goals, then some people find that writing down your goals or sticking a copy of them up where you’ll see them regularly, such as on a noticeboard, can help them keep focused.

If you’ve not stopped to think about or plan out your own goals recently, then why not have a go now? We’re over halfway through the year, so you could use the latter half of this year to set some small, achievable goals and see how you get on. In January 2011, you could review how you’ve done and then set yourself some new goals to work towards next year.

Not all goals work out as planned, particularly if they’re affected by the wider economic situation, and there may be times when you have to go back a step or two before moving forwards again. In the case of long-term goals, your eventual goalposts may change over time, or you may wish to revise your aims.

Whether you stick to your goals completely, or find them changing over time, having the ideas mapped out in the first place can be very useful and, if nothing else, will give you ideas and information to look back on when you’re reflecting on your property investing career.

Catch up on the other instalments in our A to Z of Property Investing series:

A is for Appreciation
B is for Buy-to-Let
C is for Contracts
D is for Deals
E is for Experience
F is for Freehold

We’ve now got as far as F in our A to Z of Property Investing and F is for Freehold. As a property investor, it’s always advisable to double check what type of lease the property you have has before you buy, so that you don’t experience any unwanted surprises further down the line.

When you buy a property with a freehold lease, you gain complete ownership of the land and all of the buildings that are on it. Subject to laws and planning regulations, you have the right to do what you want with the property. Most houses in the UK tend to have freehold leases, but many flats and apartments have leaseholds.

In contrast to freehold, a leasehold property is leased to the owners for a set amount of time and usually comes with particular terms and conditions that need to be met in relation to the property, such as paying an annual maintenance fee.

When you’re researching properties to buy and looking at the particulars of certain houses or flats, then it’s essential to get into the habit of checking to make sure whether it is freehold or leasehold. Although there’s nothing wrong with owning a leasehold property and many people successfully do so, some investors prefer to stick with stick with an area they’re familiar with and always opt for freehold properties above leasehold.

As with any property purchase, as long as you do your research carefully, read the small print and are always clear about exactly what you’re buying, then you’ll put yourself in the best position for buying.

Catch up on the other instalments in our A to Z of Property Investing series:

A is for Appreciation
B is for Buy-to-Let
C is for Contracts
D is for Deals
E is for Experience

In our A to Z of Property Investing series, we’ve reached E which, amongst other things, stands for Experience.

All property investors have to start somewhere and not everyone is blessed with heaps of experience in the first instance. Whilst experience is not necessary to get you started, it certainly helps as you progress with your investing career and many property investors will agree that they’ve learnt and grown from good and bad experiences along the way.

Sometimes the first step on the property investment career is with a property that happens to be available at the right price and at a time when someone wants to have a go at being a landlord and making money from property. It can be a good starting point, helping people get to grips with the basics of working as a property investor, but it’s only over time, when you learn about what works, what doesn’t and how you could improve on your track record that experience is gained.

Some of the common areas in which people typically gain lasting experience include issues such as:

Where to buy property
What type of property to buy
What type of tenants to aim for
Marketing a property
What rent level is realistic
When to sell
Using effective letting agents

What experience have you gained since starting as a property investor? Is there anything you know now that you wish you knew when you’d started out? Leave a comment and share your thoughts.

To help build up your experience and knowledge, then you’re in the right place, with property experts HBF Investments.

When you’re working as a property investor and trying to make a profit on your investments, it’s only natural that deals will form part of your success. So it’s not surprising to hear that in the latest of our A to Z of Property Investing series, D has to stand for deals.

Getting a good deal can make or break many aspects of property investing. In the first instance, paying the right price for a property is crucial, as it influences the amount of money you make back on it, through renting it out and, further down the line, selling it on. Being able to negotiate well and get a good deal is highly advantageous and is a good foundation for the months and years to come.

When you’re looking for a mortgage, shopping around for the best deal can help too, and if you’re decorating or renovating a property ready to let it out, then it’s useful to negotiate deals with tradesmen and builders, wherever possible. If you have other properties in your portfolio, then offering the potential of additional work can help clinch that crucial deal.

There are deals to be had with managing your properties too. It can make life as a property investor and landlord a bit less stressful to have your properties managed by a team of experts and, whether you’re a first time landlord or have a string of properties under your belt, you may well be able to crack a good deal with a property management company.

The ability to negotiate a fair deal that keeps everyone happy will crop up time and time again when you’re working as a property investor. If it’s not your forte to start with, then learn to become a better negotiator, as it could have a very positive effect on the whole realm of your business.

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A to Z of Property Investing: C is for Contracts

A to Z of Property Investing: B is for Buy-to-Let 

A to Z of Property Investing: A is for Appreciation 

In the property investing world, buy-to-let is a buzzword and concept that you can’t fail to miss. In fact, it’s the crux of the business for the majority of property investors.

The idea of buy-to-let is pretty self-explanatory – you buy a property at a good price and let it out to tenants, giving you a regular income on the property. Not only that, but the hope is that when you come to sell, the property will have risen in value, giving you a tidy profit. It might sound easy – and this has surely tempted many people to have a go at buying-to-let – but it’s not always as simple as that.

For example, there’s the small matter of finding the right property to buy and getting it at an affordable price. Any old property won’t do – you have to select the right type of property, in the right area and market it towards the right type of people in order to stand a chance of being successful. If you get any of these factors wrong, you may find yourself stuck with a property that you can’t rent out, which will be costing you money. This is the point at which many hopeful, or amateur landlords, get disheartened and give up on the idea.

Serious investors, however, are usually more aware of the importance of market factors and, in theory, should have done more research before purchasing a buy-to-let property. They’re not immune from the odd buy-to-let purchase mistake, but are usually more prepared to learn from their mistakes and move on to the next investment.

As well as describing a type of property purchase, the term buy-to-let is often used for a type of mortgage option. In the height of the property surge, buy-to-let mortgages were very widely available, with many great deals available to tempt people. Although still an option, the choices have somewhat narrowed, but this has helped weed out the ‘having a go’ investors, and given more room to the serious buy-to-let property investors.

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A to Z of Property Investing: A is for Appreciation

There are all sorts of issues involved in successful property investing and in this A to Z guide, we’re going to be exploring some of them. To kick things off, A is for appreciation.

In the property investing world, appreciation refers to the positive effect that occurs when you invest in a property that goes up in value over time. It should be the goal of all serious investors to try and achieve good appreciation on their properties, not least as it increases the chance of making a profit when the time comes to sell.

The appreciation factor isn’t something that can be controlled easily – if only it were – but you can increase your chance of getting a property that will appreciate by putting careful thought into your property purchases. Some of the market factors that influence appreciation include supply and demand. As our property hotpot series has been exploring, buying in certain areas can help harness the demand for your property, if it’s in an area that is particularly popular and where there’s currently an undersupply for rental homes.

Inflation can also help property prices appreciate over time and so too can making improvements to your property. These need to be weighed up carefully, to ensure that the improvement will add long-lasting value and they’re particularly beneficial if you can also add extra value for rental purposes too. Improved bathrooms, kitchens and extensions are all common improvements that can make a significant difference.

Overall, if you’re a serious property investor, then the issue of appreciation should be firmly on your radar and you should keep aware of market factors when making business decisions.

If you want to invest in property, but perhaps can’t afford to make the full financial commitment yet on your own, one option is to invest with friends or family. It’s not an option that appeals to everyone, and can have its ups and down’s, but as long as you’re all clear of what’s involved and where you stand, it can work out successfully. If it’s a choice you’re exploring, then here’s a look at the key pros and cons of choosing to invest in property with friends or family.

The pros of investing with friends or family

* Being able to buy a better property than you could afford on your own. And hopefully making a good profit on it if you decide to sell!
* The extra financial support is good, but it’s also useful to be able to share other expertise too. For example, one of you might have good investing knowledge, whilst the other might have experience with letting properties.
* For first-time property investors, it can be beneficial to be able to share the responsibility, especially with big decisions.
* When things are tough, or you’re having a difficult period with letting the property, it’s good to have someone in the know to talk things through with and brainstorm new ideas with.
* It can help to able to be able to split the tasks between you, rather than one person having to do everything.

The cons of investing with friends or family

* Business doesn’t always mix well with friendship or families. It may put an extra strain on your relationship to enter into a business arrangement together.
* Any emotional attachments you have with the other investor can affect your business judgement.
* If they don’t have exactly the same property investing objectives as you from the outset, things could get tricky further down the line.
* Difficulties can occur when one investor wants to sell a property and the other doesn’t (and can’t afford to buy them out).
* Tension can be created if one partner owns a greater share than the other.
* If the other person defaults on payments, or suddenly pulls out of the deal, you’re left in the lurch.
* If anything goes wrong, or the property investing venture doesn’t work out, then you could end up losing a friend as well as a business.

Going into a business partnership like property investing, with a friend or family member, isn’t a decision to be taking lightly. You need to be clear from the outset as to what is expected from each of you, what your views are on managing the property and on long-term expectations. For some people, it can work well; for others, it’s disastrous.

What do you think? Would you go into business and buy a property with a friend or relation?

The Google Earth satellite mapping system might not, at first mention, seem all that relevant to property investors. However, it’s an invaluable tool to have and there are many benefits to be gained by property investors who take the time to explore its potential.

The Google Earth system lets you view satellite images, maps, buildings and terrain anywhere in the world. This means that you can hone in on a certain area, such as a town, street or even a house that you’re interested in and get to view it up close online.

For property investors, Google Earth is a really useful tool to be able to use, as it means you can suss out properties you’re interested in purchasing, see neighbouring homes and explore what the local area has to offer.

It doesn’t necessarily mean you don’t need do these things in person too, but it does give a very useful alternative perspective on things, as you can see the size of a house from above and in 3D.

There are a lot of ways in which you can use Google Earth to your advantage when you’re thinking about investing in property. Here are two of them.

Google Earth can help you look at a specific property

Google Earth is great for honing in and getting a much closer look at a specific property. Although you may well have already got property specs, the 3D imaging allows you to see the property from another perspective.

You should be able to see the property, any extensions that have been built on the property, the size of the garden and access points, plus look at in relation to neighbouring properties. For example, if you know the prices of other properties in the same road, you can compare visuals of their size, access, garden etc. 

Google Earth can help you study the area

It’s always important to look at the property location and look at what the area has to offer, and you can get a reasonable idea using Google Earth.

For example, you should be able to see what shops, schools, supermarkets, pubs, leisure facilities or railways are in the location and how near or far they are from the property you’re interested in.

Or you can see what large businesses are in the area, such as factories or major employers, that may need properties to house workers, or organisations where key workers would be based, like large hospitals.

When you’re considering what type of property to invest and the location for it, one type that’s definitely worth thinking about is student accommodation.

As recent news reports have highlighted, increasing numbers of students have applied for university this year and in university towns and cities across the UK, there is always a demand for good quality rental accommodation and HMOs – Houses in Multiple Occupation.

Even where there are universities with halls of residence, there’s often not enough room for all first year students to have a place in halls, and some want to live elsewhere anyway, and it’s common for students in subsequent years to want to move out and share a house with their friends.

Although students are often earning nothing or only a small amount from evening or weekend work, when you’ve got a shared house with multiple rooms available, you can still gain a good amount from rent and achieve decent rental yields.

Most university towns will have areas that are typically populated by students in rental accommodation and HMOs and generally property prices in these areas are lower to start with – which is another benefit for investors.

Since 2004, anyone investing in HMOs needs to gain an HMO license. Although it can take a bit of time to apply for the license and meet the requirements, such as installing fire alarms, it’s an essential and necessary part of the process.

If you’re thinking of going down this route, then researching the areas and identifying the places where student accommodation is popular is highly recommended, as you want to ensure your property is in an area where students want to live.

It’s also essential to check out the rental rates in that area – now is a good time to investigate, as properties are being advertised to attract the new intake of students – and look at what they offer in terms of fittings and furnishings.

Although it’s often assumed that student accommodation will be basic, properties offering added extras, such as satellite TV, broadband, gardening or even a cleaner, may command higher rental fees.

With property prices currently low, buying in the right place for student lets could be a great investment.

Source: David Coughlin – HBF Investments