Property Investment Strategies

 


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If stocks and shares have been too much of a roller coaster ride over recent years or you are simply looking to diversify your investment capital, you may want to consider the following property investment strategies.

Buy-to-let

The term ‘buy-to-let’ first came about during the mid-1990s and describes the practice of purchasing property to rent out to tenants.

Over recent years, buy-to-let has become very popular and with many people priced out of the housing market, there seems to be plenty of demand for rented accommodation.

When buying-to-let, ensure that you pick properties with rental appeal and that the rent you charge each month will cover the costs of the mortgage and management fees.

Property development

This strategy ranges from renovating run-down homes to purchasing land and building completely new houses.

Usually the developer will be able to spot some unrealised potential in the property and immediately after purchase begin making the changes to release that potential and increase the value.

Speculating

Put simply the speculator will buy the property cheap and go on to sell it at a higher price to produce a profit.

There are many ways for this to be done, including buying off-plan at discounted prices or predicting where the next property hotspot is going to be.

Speculators can also increase the value of their property by obtaining planning permission to build on the land, before selling it to developers.

Property speculation is often a medium to long-term activity, but a short-term version, often known as ‘flipping’ exists, where the property is immediately sold again shortly before or after purchase.

An example of flipping would be a property investor purchasing a house at auction and then putting it straight back on the auction the following week with the intention of selling at a higher price.

Degrees of risk

All of these strategies carry varying degrees of risk, but can also provide a good return on investment if properly managed. As always, investors are advised to seek professional advice before entering into any transaction.

Don Suter is Managing Editor of the UK Property Portal (http://www.ukpropertyportal.co.uk ), an online directory for UK property sales, rental, surveyors, mortgages, conveyancing, property insurance, removals, news, investment and development.

For more information and advice, search our property investment pages

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