Another factor making property investment so attractive for me is the
use of leverage. Leverage refers to the use of borrowed money to
increase your profits in an investment. Building sustainable wealth and
income through property investment will require the use of leverage.
Essentially, leverage is the ability to use little money to buy a
comparatively expensive asset. Assuming you put down £7500 on a £50,000
investment property. If your property appreciates by just 7% in the
first year, it will be worth £53,500 after 12 months. If you now decided
to sell this property you will have made a return of £3,500 or 47% in a
year - a return you will struggle to find at your local bank or
elsewhere! Of course, you would have faced some buying costs - but if
investing wisely 6 months rental income should more than cover these.
The above is for illustrational purposes only - I would probably have
kept the property for a few more years if it was in a good growth area
and rental demand was strong. That is unless my money could be working
harder for me elsewhere. I would recommend taking a look at our 'Example
Investment Properties' page for a more precise calculation of how your
money can work for you.
Basic Principles
Picking up the basic principles of investing in property is very easy.
There are numerous courses that you can attend that range in price
anywhere from a few hundred pounds to thousands for week long courses.
There is also a wealth of information on the internet and in books these
days. Property investment knowledge is not something that is taught in
schools or at university - most successful investors we work with and
know are self taught. I would recommend learning and investing in the
way you feel most comfortable with. Some investors are self taught and
find their own deals, and others have taken crash courses and pay
companies extraordinary fees to find the right deals. Both can work very
well, but a reliable source of information is vital. You must also be
very careful which firms you are working with - I have come across many
firms that offer poor deals, make promises they cannot keep, and have
poor levels of customer service.
Strategy is also all important whatever stage of investing you are at.
You must define your goals clearly, and stick to looking for deals that
can help you achieve those goals. For example, you must decide whether
you are looking to build equity or a stream of cash flow. Some investors
primarily invest in a holiday home for self use and others will buy
scores of properties a month and not visit one! Some investors prefer to
invest only in their local market, while others will buy in several
high growth areas overseas. Other investors we work with prefer the
hands-off approach and invest in funds and syndicates; there are many
different possibilities out there. Whatever your goals, I strongly
recommend taking the time to define these before starting to invest. One
of our team will be happy to talk through your situation, and point you
in the right direction.
Types Of Return
Investors can expect two different types of return when investing in
property; income and/or growth. If investing for growth or capital
gains, investors generally take a longer term view rather than needing
more immediate access to capital. During your investing days, your
priorities may change depending on your salary and other sources of
income. It is likely that you will require income from your investments
more so later in life as you work less and less. Planning for income,
growth, or a combination of the two, often stems from your tax position,
your immediate requirements for cash, and your longer-term plans. Many
people construct a property portfolio of investments which offer a
combination of income now and future growth. At Bueno Investments we
emphasize the importance of income as well as growth as a determining
factor in a successful property business.
Taxation
Taxation is also a factor that you must take into account before
considering any investment. Unlike other forms of taxation, property
taxation is a very complex subject and I would recommend speaking with a
property tax specialist if there is anything you are not sure about.
For UK residents, the main taxation areas are Capital Gains tax, Income
tax, and Inheritance tax. There are also several non-standard Taxes that
you must be aware of and new laws being passed all the time which can
be a lot to keep on top of. Our advisors will be happy to talk through
anything you are not sure about or recommend a property tax specialist.
Using A Good Team
Along with a good tax specialist, it is vital that you have a mortgage
broker and solicitor that you are happy with, are competitively priced,
and that you work well with. Having a good team in place can save you
time and money later down the line, and let you rest assured that they
are acting in YOUR best interest. We have several mortgage brokers and
solicitors that we can recommend for any UK or overseas deals. We only
recommend firms that have been tried and tested and that we work with
ourselves.
Specifically, Location, Location, Location
In terms of the UK, there are several locations in the North of England
that we are currently very confident offer good value. Growth fuelled by
local development is continually pushing up prices in the majority of
cites we target. More importantly, high yields are still achievable in
certain parts of these areas as the rent-purchase price relationship is
favourable for investors. As mentioned earlier, it is imperative to know
where to invest locally, and to have a good management / refurbishment
team there.
Scott Goodall -
Scott co-founder of Bueno Investments, which was formed in 2005. Prior
to this, Scott had been working in the property investment industry for
many years where he built the foundations for the knowledge and
experience he has today. Scott was fortunate to have worked with an
excellent investor in his early years, which enabled him to learn the
art of seeking out the few excellent opportunities on the market.
Within the company, Scott is primarily responsible for sales facilitation, business development and public relations.
In his spare time Scott enjoys spending time with family and friends,
personal development events, playing sports with his favourites being
tennis, football and golf, and he is a keen gardener. Scott also has a
degree in Business & Finance Economics at Royal Holloway (University
of London).
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