Thanks for releasing me from the confines of this page. You see, unless I am being read by someone like you who understands me, I am no more than a collection of shapes (called letters) that make no sense on their own. But once read in my entirety, I have the power to impart knowledge and experience on you.

And just like the ‘Genie’ rewarded ‘ Aladdin’ for releasing him from the confines of the lamp, for every sentence that you release from this page, I am going to reward you with a piece of priceless information that is sure to help you achieve your investment goals.

Before I continue, it would be safe to assume that you are someone who is very serious about your financial future, right?

Thought so – I recognised that quality in you the moment you read to this point. In my time I have come across 3 main types of reader:

i. Those that just read the main title and subtitles for each section and then think they know what the contents they have not read are.

These guys always tend to come back to me at a later date – usually after they have made all 10 of the most common property investing mistakes and lost themselves a fair bit of money in the process.

ii. Those that read me a bit at a time and because of this, I never get a chance to share with them all the treasures that lie within me.

These guys tend to make about 5 of the 10 most common property investing mistakes and therefore, are always one step away from financial disaster.

iii. And finally, those who take the short time required to read me in my entirety. These are the smart ones who receive the knowledge I posses and use it to create treasures and the type of life that most people only ever dream of!!

These are the guys who retire early, have fun and exciting lives, have great relationships with your family & friends, be loved & admired by everyone you meet!! This is the future I foresee for you!!

Ok – as much as I sincerely enjoy your attention, I know that ‘time is money’. And it would be selfish of me to keep you here longer than I need to.

So it’s time I shared with you ‘The 7 Most Common Property Investment Mistakes’ and showed you ‘How To Avoid Them’!

Mistake #1 – Failing to Create An Investment Plan

Surprisingly, there are many property investors out there investing with no plan. Those guys fail to recognise the importance of having goals to work towards – and some even go as far as dismissing this concept outright.

Take it from me – investing without a plan is a sure route to financial disaster. I am confident you have heard the saying:

‘If you fail to plan, you plan to fail!’

On the other hand, setting clear goals is the first step towards becoming a successful property investor. You see, successful investors have the following 3 things in common;

i. They set their own specific goals

ii. They develop a plan for achieving those goals

iii. They remain focused and take action on implementing their plan

With clearly defined goals you can easily devise a plan to realise them. But before setting goals, it is important to have an end result in mind – a dream to work towards.

This dream must be your dream and not someone else’s because when it belongs to you, it will keep you focused and motivated at all times. Especially at times when things may not appear to be going to plan.

However, in order to turn your dreams into reality, action is required. And a plan will enable you to take consistent action towards achieving your goal.

So how do you avoid this common mistake?

Easy – just set up a plan using the following simple steps:

a. Set your property goals & write them down

b. Set a time-frame for your goals

c. Identify the things you need to do to achieve your goals and put these into an easy to follow step-by-step plan

d. Take immediate action & remember to review your plan on a regular basis to make sure you are on track

So now you know how to avoid making No. 1 of the 7 most common property investment mistakes, let’s move straight on to No. 2!

Mistake #2 – Taking Investment Advice From Friends & Family

Please believe me when I sincerely state that my intention is not – in any shape or form – insult your family and friends.

What I am simply trying to remind you is of what you know already – and that is; although you may have a lot in common with friends & family, what works for one person may not be right for another. Especially when it comes to financial decisions and investment planning.

Where I’m from, we have a saying that sums up this wisdom and it goes:

‘One persons meat is another persons poison!’

I mean think about it – do you and your friends & family;

• Like exactly the same colour, football team, food, film, book, career, choice of partner, etc?

Exactly!

So although our friends and family may have our best intentions at heart – we hope – we know that the advice they give us is not always the best for achieving our personal goals and realising our dreams.

So how do you avoid this common mistake?

i. Remain fully aware of your personal and financial position and how it relates to the advice giver. You might want to think twice about taking advice from someone who has a history of making bad financial decisions. Also, never take investment advice from someone who has never invested in property.

ii. Be aware of the advice givers area of expertise and see how that relates to the advice they are giving. For example, a friend may be great at giving you relationship advice – but that does not automatically qualify them as a property investment expert.

iii.Only ever take advice from people who have already achieved the goals that you are aiming for, as these are the people with the experience to help you navigate the inevitable obstacles you will face.

iv. Make sure that you have current knowledge of the property market at all times. That will help you identify whether the advice you are being given is relevant to today’s market.

v. Refer back to your investment plan that you created to avoid mistake No. 1 – this will help you establish whether the advice you have been will take you closer too or further away from your goals.

vi. Find yourself an experienced property investor to act as your guide and mentor. Ok – now you know how to avoid mistake No. 2 – let’s move on to mistake No. 3!

Mistake #3 – Not Buying Property Significantly Below Market Value

This mistake is very common among other investors because although they see why it would be ‘nice’ to have, they rarely see why it is ‘important’ to have.

Getting a property at £5,000 pounds below the original asking price is ‘nice to have’. But it is important to secure a large enough discount that will cover all your major purchase costs (e.g. deposit and stamp duty). This approach will greatly lower the amount of personal capital you need to invest in any one opportunity.

Another important reason to always buy property significantly below market value is because: Profit is made at the time of buying, and realised at the point of selling!

You still with me? Good. Because I know that the last statement may not be an easy one to digest. When I was first exposed to this concept in Robert Kiyosakis’ bestselling book ‘Rich Dad, Poor Dad’, I was ‘more than confused’. So if you are confused at this stage, let me congratulate you because ‘confusion’ is a sign from your brain that you’re about to expand your cognitive awareness and learn something new!!

Let me now use the following example to help you through your confusion:

Let’s say a property is worth £100,000 and you buy it for £100,000. You would have £0.00 equity/profit in the property.

I see a similar property for £100,000 but buy it for £80,000. I would have £20,000 instant equity/profit in the property from day one.

Let’s assume a few years have gone by, the market has fallen and both our properties are now only worth £90,000. When you sell, you are down £10,000. When I sell I am still up £10,000, because I bought with a £20,000 profit.

So you see: Profit is made at the time of buying, and realised at the point of selling! You may be wondering why I have chosen to use an example where the property drops in value. The reason for this is that you need to be fully aware that the housing market can go up as well as down.

And to be successful in property you have to make sure that you have sufficient downside protection so that you never lose money – even when the market is on a downward trend. Typically, buying property at least 10% below market value will give you a sufficient ‘buffer’ to protect your investment in the unlikely case the market drops in value. So, from here on, you might want to make it one of your investment rules to never invest in property unless you are getting at least 10% discount of its real – not speculative or inflated – market value.

So how do you avoid this common mistake?

i. First – adopt the 10% BMV rule. ii. Next – sharpen up your negotiating skills. A good place to start is by reading Donald Trumps’ bestseller ‘The Art of The Deal’. iii. Finally – find the ideal property and close the deal!!

Pretty straight forward, but potentially time consuming, right?

No need to worry – because if you send an email now to enquiries@genieproperties.co.uk, you will instantly benefit from access to a wide range of investment opportunities, as much as 25% below market value!

We’re now done with mistake No. 3 – so, without further ado, let’s take a look at No. 4 of the most common investment mistakes.

Mistake #4 – Joining The Wrong Property Club/Syndicate

In the previous section I presented you with a tried-and- tested option for acquiring your 25% below market value properties through a trusted & established property network.

And to be totally honest, you are not just limited to this option because if you go to Google now (or any other search engine for that matter) and type in ‘discounted properties’, you are sure to come across a long list of ‘property clubs/syndicates’ that may be able to offer you similar opportunities.

However, do be aware that not all such companies work to the same high standards you deserve – in fact, an alarming number of property clubs/syndicates are notorious for inflating prices by up to 25% so that they can offer fake discounts to unknowing investors like you!!

In addition, some of these clubs/syndicates fabricate the rental information so that they can pass-off bad investment opportunities as ones that stack-up.

I cannot begin to tell you the number of investors who I have come across that have had their whole hand – not just their fingers – burnt from such unscrupulous practices. And the last thing you – or I – want is for your to share that experience with them.

That said, it is important for you to be aware that not all property networks are dishonest. In fact there a few that conduct themselves with Integrity, Due Diligence & Transparency in all they do – and all you have to do is sift through the muck to find them.

Here are some simple measures you might want to take to help you easily indentify the ‘good’ and avoid the ‘bad’:

i. Find out what the club/syndicate/networks mission objective is. This may help you establish whether you share the same core values.

ii. Check with Company House to see if the club/syndicate/network is registered. You may find that a registered company is more likely to act in a honest & professional manner.

iii. Speak with other property investors to find out what the property club/syndicate/networks general reputation is. Also, get the club to provide you with testimonies from past clients.

iv. Make sure to conduct your own due diligence into any information the club provides you with. Ask them for the source and full disclosure so you can verify its accuracy for yourself.

If followed correctly, these measures will go a long way in protecting you from falling afoul of unscrupulous property clubs/syndicates and help you identify ‘the good guys’ that you should be associated with.

Mistake #5 – Not Conducting Sufficient Due Diligence

Everyone knows that it is easy to lose money, right? Which begs the question:

‘Why do so many investors insist on investing without first carrying out sufficient due diligence?’

Do you know the answer – because I don’t!!

Let me be totally frank with you here; investing without conducting due diligence is not investing – its gambling. And we are not gamblers, we are investors. Many so-called ‘investors’ have made this very costly mistake and lost everything they own as a result – including the shirt off their back and the ones on the washing line!!

It is very important that you are aware the outcome of any due diligence process is only as good as the qualify of the information it is based on.

If you are reading this right now, it is safe to assume you are alive and living in what is being referred to as the ‘Information Age’ – an age where timely, accurate information is a highly prized & sought after commodity.

The thing about information is that it is always changing, ever evolving and very far from being static. Therefore, to be confident in all your investment decisions you need to have instant access to relevant, up-to-date, accurate and honest information obtained from reliable sources.

As with most things, information gathering and analysis is a time consuming process. It also requires a certain level of expertise to be able to sift through all available information to find that which is relevant to your requirements. And in an age where we are constantly being bombarded by information from all angles, this activity can become overwhelming.

Because of this and the fact that we all have our everyday responsibilities to take care of (family, jobs, social, etc) some investors choose not to conduct necessary due diligence and make investment decisions based on incomplete, old and even wrong information. This is a sure route to eventual financial disaster.

So, if you want to learn from the experiences of others and avoid making this mistake, pay attention to the following:

i. Always investigate every opportunity before investing. You should at least spend as much time researching a prospective investment opportunity as the amount of time it takes to earn the capital you intend to invest.

ii. Demand honest, accurate and transparent information on every investment.

iii. Where possible, always ask for full and complete disclosure of every detail of the investment.

iv. Verify for yourself that the information provided is accurate. v. Make sure that you are always getting timely, accurate information from an, honest, reputable and reliable source. This will greatly reduce the amount of time, money and energy you will personally need to spend conducting accurate due diligence.

Disregard these rules and you are in for some very costly lessons.

Follow this advice and you will eventually become a very successful investor!

Mistake #6 – Making Emotionally Based Investment Decisions

As you already know, investing has nothing to do with emotions and everything to do with financial returns.

For example – it does not matter if you have a spa in the bedroom at home and the investment property does not, or the window coverings are not what you have at home. You are not going to live in it – it is an investment and you have to look at it from that point of view.

Remember: its all about your return on investment – let the figures and supportive information do the talking and not your personal preferences.

The flip side of this is that some investors become emotionally attached to a particular investment property once they have acquired it – and because of this are reluctant to offload it when it stops being an asset and becomes more of a liability.

Newsflash – a property is an inanimate object or thing. And I am sorry to be the bearer of bad news but regardless of how much love you have for it, it will never, ever return that love back to you. Or anyone else for that matter!! So do not try and have a relationship with it – because that relationship is doomed for certain failure – in fact, it’s a non-starter.

You should only invest in property for one reason – to make money – and not for any other purpose. And as soon as that investment starts losing you more money than you are comfortable with losing – and/or is no longer taking you towards the achievement of the goal you set yourself in your original plan – it’s time for you to ‘get out’ and ‘move on’.

To avoid this common mistake, all you need to do is:

i. Do your due diligence ii. Assess all the relevant information available to you iii. Refer back to your investment plan iv. Never lose sight of the reason you are investing. And that is to make money – preferably loads!!

Right – you are now one step away from being well ahead of the pack!! So without further ado, let’s move on to the last – but not least – of the 7 most common property investment mistakes!!

Mistake #7 – Investing Without The Guidance Of A Trusted Mentor

What do all the following people have in common?

• Bill Gates

• Warren Buffett

• Michael Dell

• Donald Trump

• Oprah Winfrey

• David Beckham

• Richard Branson

• Tiger Woods

If you said that they are all mega-rich, you are right! And if you said that they are all very successful at what they do, you are also right!!

But are you also aware that one of the reasons why they are so rich and successful is because they all have mentors/advisors/coaches?

You see, they fully understand and live by one of the major secrets to success – which is seeking the personal guidance of those who are experts in your field of interest to assist you in getting to the next level.

A mentor is ‘someone whose hindsight can become your foresight’

They are accessible to you in many forms, including – and not limited to – in person, through books, via emails, phone calls, etc.

Mentors use their experience and knowledge to guide and motivate you towards the goals you set ourselves.

They encourage you to step outside your comfort zones and move to the next level of success. They support you on every step you take on your journey to the top – and once you get there, they will help you to stay there!!

Because you want to be successful, here is what you need to do to avoid this mistake: Find yourself a trusted mentor with the knowledge and experience to guide you to where you want to get to!

To do this you need to start by keeping your eyes and ears open to identify the best people from whom you can learn professionally.

Seek out a successful professional whom you share common values with and can relate to. Look for someone who conducts their business relationships with Integrity (at all times), Due Diligence (at all stages) and Transparency (at all levels).

Find a mentor that is consistent, honest and trustworthy, who has a proven track record for delivering results and a reputation for always providing value.

Follow this advice and one day, you too will have your name listed above with the mega rich and very successful.

So there you have it – you now know the 7 most common property investment mistakes and how to avoid them.

But be aware – all that has been covered here are the 7 most common property investment mistakes. It would not be possible to cover all property investment mistakes here – especially since new mistakes are being made every day by some investors somewhere in the world!! And some of these other mistakes are even more crippling than the ones we have covered here!

That said, what we have covered here is enough to see you safely on your way to success – but only if you take instant action on the knowledge and wisdom that I have shared with you in this ebook.

Because, as you already know:

‘Knowledge is power – only when combined with action!’

So start today, right now and take the necessary actions required to avoid the 7 most common property investment mistakes.

I am here if you need me – all you have to do is ask, and ‘Your Wish Is My Command!’

Author Ade Shokoya provides FREE support and guidance on personal development and personal empowerment. View personal empowerment articles, profiles, tips and more by simply clicking: Personal Development or Personal Empowerment now.

Article Source: http://EzineArticles.com/?expert=Ade_Shokoya

http://EzineArticles.com/?The-7-Most-Common-Property-Investment-Mistakes-and-How-to-Avoid-Them!&id=499101

 

Email:

We respect your email privacy

 

 

Some people choose to borrow from friends and family. This is sometimes a good option, but can often put additional pressure on you and there is also always a risk it could affect valuable personal relationships.

If you are currently a homeowner you could look into re-mortgaging your property to raise the finance. This will probably increase your monthly mortgage re-payments, but is often the quickest and easiest way to get you started. You can download a great free re-mortgage guide from Moneysavingexpert, which provides some helpful tips.

In some cases people take out an option on a property. This is a legally binding agreement between you and a vendor to buy a property. The option should provide you with a below market value price. In order to take advantage of this option you could sell the option to a third party for a sum that still enables them to buy the property below market value. This option agreement should benefit all parties and enable you to generate some funds for your own property investment. One of the best indirect ways of raising finance is to keep your credit rating as clean and high as possible. This will enable you to borrow and finance your property investing.

A joint venture is another popular way of raising funds. If you can find a partner or even partners that are willing to invest with you this can things much easier. You can use family and friends or even networking event to find partners. One important note is that you should always seek legal advice before undertaking a joint venture with a formal written agreement in place.

If you are lucky enough to have multiple investors you could possibly start a property club. All parties involved should have designated roles. The benefit of this is that it’s potentially open to new members as word spreads. You can even find property clubs online.

I strongly advise that you visit this site before joining or starting your own property investment club.

Below Market Value Property

Article Source: http://EzineArticles.com/?expert=Louise_Goldstein

http://EzineArticles.com/?How-to-Raise-Money-For-Property-Investing&id=2243450

However strong the local rental demand and general availability of good quality tenants, it will all be to little use if your investment property is poorly located or unattractive and/or of the wrong type for the local market. So time spent surfing the net, building relationships with good local agents and actually viewing properties yourself, will be time well spent!

Concentrating on yield

For years, property investors have been concentrating on potential capital growth and being prepared to accept fairly unimpressive net yields of 3% or 4%. Obviously in a property market where there is little inflation, this will no longer do and investors must look at what sort of yield a property might realise, while still of course regarding the property as a long term capital investment.

The problem will be that you will need fairly serious amounts of capital to capitalise on this developing situation. There will still be mortgages available, but only to people who are regarded as a reasonably good credit risk. The days of the 90% and 100% mortgages are generally over for the foreseeable future, and in the end that will not be a bad thing.

When the current boom began back in the ‘gold rush days of the late nineties it was relatively easy to profit from buy to let. Landlords with the right properties could achieve as much as 15% yield along with phenomenal capital growth and even a ‘so-so’ property could be profitable.

That is no longer the case. With the huge increase in property prices and the increasing competition between landlords for tenants, it’s become hard to get more than a 5.5% Net Yield, so more than ever it’s very important to buy the ‘right’ property.

Buying investment property Do’s and Don’ts

I suppose these do’s and don’ts are not really hard and fast ‘rules’, and there are always exceptions, but you would do well to follow these guidelines where practical in order to profit from your properties.

1. Don’t get too personal

Don’t buy an investment property just because you personally would like to live in it. Always look at it from potential tenants’ points of view.

Also, try to avoid spending too much refurbishing the property. You may fall in love with a fantastic £20,000.00 kitchen and a £10,000.00 bathroom with taps costing over £200.00 each, but unless yours is an extremely up-market apartment, you will be wasting your money, as there tends to be a ‘ceiling’ rent for a given size flat or house in any given location.

2. Do research the market. Who will be your tenants?

Where and who are your potential tenants? Are there businesses and organisations locally with an ever changing workforce, such as hospitals, universities, even TV studios where people are usually employed on short-term contracts?

Flats and house conveniently located for these kind of places should usually let easily.

3. Do be well connected

The old adage, ‘Location, Location, Location’ is paramount when it comes to suitable buy-to-let property. It is always helpful for the property to be no more than 15 minutes walk from a station if in a city like London, or at least close to other travel links such as motorways, bus routes etc. Also, look for handy shopping facilities, bars and restaurants, as these are always attractive to tenants.

4. Don’t fool yourself!

If you’re buying a leasehold property, always remember to factor in ALL the costs.

Here is a useful checklist:

• Check the Service Charges
• Check the Ground Rent
• Check the Buildings Insurance (usually included in the service charge)
• Remember that you may well have void periods, possibly up to two months in every 12 during change of tenants etc.
• Remember repairs and renewal costs

Gas and possibly electricity safety checks can cost up to £150.00 a year, although if you shop around you can probably spend less.

5. Do pay attention to things you can’t control

If you are buying a flat, pay particular attention to the common parts, it’s no use ending up with your very own ‘palace’ set in a ‘slum’! This can often be an issue in converted property, where there can sometimes be no formal or at best an ill-defined responsibility for the maintenance and cleaning of common parts such as hallways, drives and gardens.

Finding the ‘right’ property

So what is the ‘right’ property? Although it may be blindingly obvious, first of all, the right property is one you pay the right price for! Successful buying to let is all about return on investment, whether that be capital appreciation over the long term or rental return. If you pay too much, no one is going to pay you more rent to compensate you.

This does not mean that you should always opt for the cheapest property. I once saw a two bedroomed terraced property in Manchester on the market for about £12000.00. I mentioned it to someone who knows that city very well and she asked me the name of the street. When I told her, she said the house was overpriced!

As a general rule, it’s better to look for good buy-to-let property in urban or suburban areas, rather than rural ones, simply because there are likely to be far more people looking for rented accommodation in urban and suburban areas. The countryside and the shires are more attractive for people nesting, older people who are settling down or retiring – these folk usually choose to purchase rather than rent.

For example, someone I know used to rent a two bed-roomed property that was worth around £270,000.00 in a semi-rural location and was paying around £800.00 per month in rent. Many properties at that time that were costing less than this within inner London were returning over £1200.00 per month in rent.

What about Ex-Local Authority Property?

Ex-local authority property, originally purchased under the right to buy scheme, can be a good investment, but you must do your homework, and a lot of legwork. A few council estates are run down, poorly managed and have significant problems of anti-social behaviour, but most are OK and have no more problems than other private inner city areas.

Check out the property, walk around the estate a bit. Is there much graffiti? Is the place generally litter-free? How does it feel? If it’s a high rise block, what are the lifts like?

In general it’s best to be a bit flexible. Offer the property furnished or part furnished and be prepared to accommodate the wishes of a tenant you feel is worth it.

New Build or Old Build?

Be careful when buying brand new. Bright shiny city centre apartments are so seductive, with their designer kitchens and bathrooms, but they are not always good value for money. Very often the developer will have set a price that is not really a true market price.

Property Clubs

City centre developments are also a favourite of ‘Property Clubs’ who profess to negotiate bulk deals with developers and pass on a so-called discount to their members. No doubt there are bargains to be had occasionally by buying in this way but I personally would avoid them like the plague!

If you must buy new, it’s sometimes best to buy the the last flat in the block as the developer wants to move on to the next project and may be open to lower offers.

Where is the best place to look for suitable investment property?

As I have already said, for the best rental yield and minimum void periods it’s usually best to purchase in urban areas, cities, places with universities, hospitals, good employment opportunities etc.

But should you consider buying a property a long way away, in another part of the UK. It is certainly true that some cities and areas of the UK are better than others when it comes to renting out property.

For various historical, cultural and employment security reasons, apart from London, many northern and midlands cities offer good opportunities for rental investment, with very healthy rental yields.

Local can be best

If you already live in or near a good investment area it is in my opinion, best to research your local area first because you know it best. Also, you can easily go back several times to check that you are making the right decision, whereas this is often very difficult if you’re faced with a long journey to go back and forth to make these necessary checks. Again, investing locally was the policy followed by Judith and Fergus Wilson when building their buy to let empire around Ashford in Kent.

Is it worth buying at auction?

Most people tend to buy property in the traditional way. They see a suitable property put in an offer subject to contract (in England & Wales), once accepted they proceed to arrange a mortgage and employ a solicitor, surveyor etc to deal with conveyancing and and surveys that may be required. This process can take up to three months and purchasing leasehold property is a particularly drawn-out process.

But there is a quicker way. Buy at auction. You can usually buy property at auction for less than in the traditional way, but there are some very important limitations to bear in mind. Your bid is NOT ‘subject to contract’, as the hammer falls you have to pay the 10% deposit plus any auctioneer’s fees, and within 28 days you must complete the purchase.

So, auctions are really for people with available funds, and you are also strongly advised to have checked through the legal pack and carried out a survey before bidding – so you really need to know what you’re doing. In times of high property demand, auctions are usually best left to professional developers and builders as they have the available funds and know pretty clearly how much they will have to spend refurbishing the property. And in the case of builders of course the refurbishments are an internalised cost.

Buying investment property in Scotland

Also, please bear in mind that even Scotland’s property law is quite different from England’s. In England and Wales a purchaser’s offer is always ‘subject to contract’, which means that either party can withdraw at any time without penalty right up to Exchange of Contracts. In Scotland, people are usually required to put in sealed bids, based on ‘offers over’ a given price. Confusingly, these offers can sometimes be up to 20% over the ‘asking price’.

Once your sealed bid is formally accepted by the vendor you are locked into a contract and both parties risk substantial penalties for withdrawal. So…it’s important to do necessary legal searches and surveys before putting in the offer.

Although the English system does have the problem of gazumping and gazundering and people just withdrawing, I still think that the Scottish system is a bit too rigid and ‘clunky’. Personally, I believe that the English system could easily be improved by each party placing say £1000.00 not returnable deposit with a stakeholder once a purchaser’s offer is formally accepted.

Don’t be an ‘armchair investor’

Over the past few years many people have believed that all they need to do in order to invest in property was to browse a few websites, maybe join a property club and let the club select properties from which they then select.

When it comes to successful property investment, whether you’re buying to let or looking to develop, there is no alternative to ‘getting your hands dirty’. You have to actually view property yourself – no one is going to be as careful with your money as you. It can be pretty hard and tedious work but unfortunately, as in slimming where the only thing that really works is eating less and exercising more…there is no simple substitute.

Yield or Capital Growth?

A very important consideration when buying any investment property is to decide what is more important to you, YIELD or CAPITAL GROWTH, or a good combination of the two?

The way to work out the yield on a property is to take the annual gross rent, subtract ALL costs (ie service charges, ground rent, buildings insurance, repairs and renewals) and divide it into the TOTAL cost price and multiply by 100 – this will give you the Gross Yield in percent. In order to determine the all important Net Yield you must subtract any letting agent commission.

Here is an example:

Total cost of leasehold flat: £200,000.00 including fees, stamp duty etc.

Annual Gross Rent: £11,000.00

Annual Service Charge, Buildings Insurance, Ground Rent: £1140.00

Letting Agent’s Commission (8% Let Only): £880.00 plus VAT = £1034.00

Gross Yield = £11000.00 – £1140 = £9860.00 ÷ £200,000.00 x 100 = 4.93% Gross Yield

Net Yield = £9860.00 – £1034.00* = £8826.00 ÷ £200,000.00 x 100 = 4.41% Net Yield

*agent’s commission

Remember that this is the TRUE way to work out whether a property offers a good yield. Don’t just add up all your costs, including the mortgage repayments, subtract them from the rent and say, ‘that’s how much I’m making’. Of course this calculation is essential, but only for your own personal circumstances. In other words, can YOU afford it, can you pay the mortgage, service charges etc during void periods, but it will not tell you the actual investment potential.

Barring major disasters, I would say that good property well located in the UK will usually be a superb long-term and probably medium term investment. But, assuming you are not concerned with capital growth, or believe there will be none in the short term and need to know whether you should buy to let or simply stuff it all in the bank then, as the Americans say, ‘just do the math’. Work out the the Net Yield and see how it compares with current savings rates.

When it comes to yield or capital growth, you can’t have everything

Generally speaking, there is usually a trade-off between yield and capital growth – you may get a good yield, but you usually have to sacrifice some capital growth. Often very up-market properties tend not to give such a good yield but do return good capital growth.

I personally believe that unless you are very wealthy or desperately in need of the rent as income, it’s best to settle for a good balance – average yield with average capital growth.

A better yield

As long as you purchase within a major city like London, you will usually get a far better rate of rental return from a council property, although you will not get quite the same amount of capital appreciation. But of course, in the unlikely event that the market goes down (shock horror!) then you will get correspondingly less capital depreciation! In this respect, the purchase of a good ex-local authority property is actually a lower risk option than buying a more up-market one.

Can you get a mortgage?

Of course, unless you are a cash rich investor, it all finally comes down to getting a mortgage, which these days is not as easy. Remember that many lenders will not lend on blocks of more than six stories, so always check with your broker or mortgage provider first before proceeding too far with your purchase.

More information is available at http://www.LandlordsandLetting.co.uk on buying to let, managing rental property, including low cost buildings/contents insurance for landlords.

Article Source: http://EzineArticles.com/?expert=James_Stretten

http://EzineArticles.com/?Profiting-From-Buy-to-Let—Finding-the-Right-Property&id=3884838

Some people choose to borrow from friends and family. This is sometimes a good option, but can often put additional pressure on you and there is also always a risk it could affect valuable personal relationships.

If you are currently a homeowner you could look into re-mortgaging your property to raise the finance. This will probably increase your monthly mortgage re-payments, but is often the quickest and easiest way to get you started. You can download a great free re-mortgage guide from Moneysavingexpert, which provides some helpful tips.

In some cases people take out an option on a property. This is a legally binding agreement between you and a vendor to buy a property. The option should provide you with a below market value price. In order to take advantage of this option you could sell the option to a third party for a sum that still enables them to buy the property below market value. This option agreement should benefit all parties and enable you to generate some funds for your own property investment. One of the best indirect ways of raising finance is to keep your credit rating as clean and high as possible. This will enable you to borrow and finance your property investing.

A joint venture is another popular way of raising funds. If you can find a partner or even partners that are willing to invest with you this can things much easier. You can use family and friends or even networking event to find partners. One important note is that you should always seek legal advice before undertaking a joint venture with a formal written agreement in place.

If you are lucky enough to have multiple investors you could possibly start a property club. All parties involved should have designated roles. The benefit of this is that it’s potentially open to new members as word spreads. You can even find property clubs online.

I strongly advise that you visit this site before joining or starting your own property investment club.

Below Market Value Property

Article Source: http://EzineArticles.com/?expert=Louise_Goldstein

http://EzineArticles.com/?How-to-Raise-Money-For-Property-Investing&id=2243450

Purchasing property can be both easy and hard.  The issue can be become more complex as you grow your portfolio or even as a beginner.  The issue is purchasing capacity.  Lets say a  great opportunity comes up and you don’t have the ability to purchase That is either for finance purposes you don’t have the equity or money for a deposit or you don’t have the  cashflow to make it work.  Here are a few ideas from the suggestion box. Remember this is not legal advice  just ideas you can mull over .

Always remember that as an investment property you potentially have rental income to help with the debt service.  There are also tax breaks involved but look at these as a benefit rather that the only purpose of going into a deal.  Saying that keep in mind that you need to take into account rental vacancies.  A good idea is to take 80% of your rent into consideration.  Next up you can find a partner. Someone you trust of course.  Hence the advantage of a property club. What this person  brings to the table is what you may lack.  Either the cashflow or equity. Or both. The only thing I would suggest is that you get an agreement in writing about what your relationship is and your entitlements and your exit strategy.  Get everything down in writing.  Also it is important that you both share the same goals.  If one what to make a quick profit short term and the other is looking for a longer term investment it probably is not going to be a good match.  Always seek legal advise and make sure it’s a true win/ win as this is potentially a long term and profitable partnership.  Partnerships like these are great way to accelerate your property portfolio growth through a property club, however it does tie you into this relationship for a potential a long time so you need trust and a common goal to make it successful.

Technorati Tags: Property Club, property Investing, realestate investing

Hi everyone and welcome to the Property Club.

if you are anything like me you have a pretty high interest in property and love in particular investing in property.  However in this day and age it is becoming more difficult.  Depending on where you are in the property process  you amy be seeing prices are ridiculously high  or the economy is shot  and within the property market getting finance is getting harder and harder.  The days of easy property buying are at an  end.  That is a good thing.   The market now demands buyers be more savvy , educated and have a clear plan regarding their property purchases..

I have had over 10 years in finance and property experience and over the years the best method i have seen for people creating successful property portfolios has been through a property club.  A hub or central point where you can seek questions and get answers and also come together to source and find out more about property in your local area.  Best of all the most useful and simple information should be free,  After all a community that works to gather can prosper together.  Remember to save this site to your favourites so you can know when we update you with new information. 

Technorati Tags: Property Club, property Investing, realestate investing