5 tips: The best property investment strategies. Which one is the most effective? Let us advise you. The economic crisis lowered property prices in the short term, but otherwise property is a sought-after and practical safe bet for increasing the value of the capital you put in. However, you still need to be careful when buying and managing it, so that you avoid unnecessary complications. How can you make sure you do not buy a pig in a poke, and secure an income for retirement or financial independence?
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What does investing in property mean?
In economic terms, it is the part of our income from employment or business activity that we put into buying a property (a flat, a house or a plot of land) so that it gains value over a specific period of time. We choose this period according to our current life situation, when we do not need the invested money. The purpose of the investment is to increase the value of the money put in effectively.
Which properties are in demand?
Young married couples planning to start a family usually first look at buying their first property, a smaller flat that is more affordable for them. With the arrival of children, their priorities and housing needs gradually change. They then start looking at buying a plot of land and building a family house. Buying a property is a demanding process and needs careful thought. Have you ever wondered what the advantages and disadvantages of life in a flat or a family house are?
Advantages of living in a block of flats
- Easy and fairly cheap flat maintenance.
- You share the costs associated with maintenance and repairs of the building with the other flat owners, which makes living there more comfortable for you.
- Better local amenities (shops, nursery and primary schools, public transport).
- Reasonable flat prices.
Advantages of living in a family house
- More space for all family members.
- More privacy.
- Closer contact with nature.
- You choose the building materials yourself, in line with energy and environmental requirements for the building.
- More creativity in adapting the house to your own ideas and needs.
Disadvantages of living in a block of flats
- Less privacy and a greater chance of conflicts with problem neighbours or tenants.
- Less living space; children have to share a room.
- Flat owners usually do not have their own garden where they can grow vegetables or ornamental plants to their own taste.
- You have to agree with the other owners on all repairs and renovation of the building.
Disadvantages of living in a family house
- You pay all the costs associated with maintenance and repairs of the property yourself.
- You also cannot avoid possible conflicts and disputes with neighbours.
- Depending on the location you choose, you also have to count on the possibility of poorer local amenities and the need to travel by your own vehicle.
- Looking after the house and garden inevitably takes more time and work.
Do you know how to invest in property? To find the right approach to buying a property and increasing its value, you first need to be clear about your financial means and how you plan to use the property. Today a bank will give you a mortgage with an LTV of 90%, but you also need to show your own funds. We hope the following guide will help you with this tricky question. 5 tips: The best property investment strategies:
Investing in property to rent it out
The purchase price of property (houses, flats and land) is rising astronomically, which increases interest in renting. The younger generation desperately watches sellers’ websites. Finding a reliable and careful tenant is the dream of many landlords. Income from renting out a property can easily become a welcome source of income. From the rent you can also pay off the mortgage you needed to buy the property.
Investing in older properties with a lower purchase price, renovating them and selling them
A short-term investment strategy that may seem profitable can unfortunately end up costing more. Buying and selling at the right moment is not always clear-cut. The last economic recession made this moment very dramatic. You must carefully consider the costs associated with buying and renovating, and the price at which you can realistically sell the property (a flat or land). With a suitable renovation, you have a real chance of increasing the market price of the property by tens of per cent.
Investing in property in new developments and waiting for the right moment to sell
Buying a new property with the help of a structural engineer and a valuer is one of the other possible forms of investment. Every investor dreams of being sure their money is invested well and having a clear plan for increasing its value. Property prices rise every year in a range of 5 to 7%, which makes the situation in the property market interesting for active investors. Important factors are the location, the current condition of the property, its size and local amenities.
Investing in property in its original condition, repairing it, then renting it out and refinancing
Buy the property at the lowest possible price and with your own money. Ideally, consider a smaller flat, which is less demanding to buy. Then repair the property at a reasonable cost and rent the flat out at a good price. After that, negotiate a mortgage at the bank secured against the repaired and rented property. Over time, the property pays for itself and you can use it as security for retirement. In addition, the money you free up can be used for further investments: repairs, but also shares, investment gold or fixed-term deposits.
Investing in converting your home and renting out part of it
This investment strategy is only suitable for owners of larger properties (two-generation flats, houses, cottages or older inherited houses). Its advantage is that you need less of your own capital. In the event that you lack funds, you can also apply for a smaller building savings loan or a mortgage. The positive side of this investment is a possible long-term income, which you can then use to repair the whole property, provide for retirement, or invest in gold or fund units.
A sensible investor should keep an eye on the current situation in the property market. Making money simply means buying at a good price and selling at the right moment. Another very important step is finding a suitable asset to invest in. 5 tips: The best investment strategies presents property investment and renting out property as a new trend. This source of inspiration is, of course, only a guide. For specific calculations, you need to visit the offices of building and financial experts.
