Bricks and mortar are one of the safest and most traditional forms of investing. Property has stood the test of time, and everyone understands the value of land and structures.
Stocks, bonds, and commodities may seem like foreign languages to some investors, but most will always understand the importance of property in their portfolio.
Property will always be in demand as the population grows and shortages in housing begin to affect towns and cities in every country across the world. The key to successful property investing is to understand the location and its future potential as an investment asset.
As a first-time property investor, you have three routes to choose from when you begin your career in real estate.
#1 Be a Landlord
Make a monthly income on rental by becoming a landlord. The benefits of renting out your property come in a consistent monthly cash flow that you can use to grow your wealth. The drawbacks of landlord businesses come in the form of non-paying tenants, maintenance issues, and property management. It’s possible to hire a management agency to take care of these activities for you, but it will come at a price.
You could snap up a property and then make a regular, monthly, income by renting it out to a tenant. There are said to be two million landlords renting out about five million properties across the UK, so this is a favorite way of investing in property. Many of the most serious investors will have a large number of properties in their portfolio.
#2 High Yielding Locations
This refers to the total amount of rent you can expect to earn annually and is expressed as a percentage of the property value. £4,000 a year on a £65,000 house would be a 6.15 percent yield but £3,750 a year on a £62,500 house is a 6.25 percent yield. In this case the cheaper home offers a better return on investment and value for your capital.
#3 Flipping for Profit
Flipping a house is a different approach. An investor will look for a home that has been foreclosed upon, or in severe physical disrepair. The investor will then pour in capital to renovating the property and ten ‘flipping’, or selling it at a higher price to make a profit. Flipping is popular among many new property investors due to the large profits that can be made. However, some struggle to sell their home fast enough and lose out on reinvesting their capital back into another deal fast enough. An experienced property agent will be able to show you how to sell your house fast, with as little hassle as possible.
#4 Indirect Property Investments
This property investment model uses a fund to collect money from various investors to use in a nominated project. The investors agree to loan their capital to the project and expect and internal rate of return on their investment. Indirect investment deals can help property investors double their initial investment in as little as five to seven years. However, all deals should be screened thoroughly before committing any capital to a project.
Closing on your first property deal and realizing a profit will have you hooked on the lifestyle from the moment the ink dries on the contract. Whatever model you choose to follow, do not expect instant success. Property investment experts all agree that every deal is a learning experience and a lifetime of investing yields plenty of lessons. Keep persisting with your investing, seek advice from mentors and make prudent decisions with your capital.