UK Investment Property the Smarter Way

Two Golden Rules of Property Investment 2008
1) Never over extend on borrowing

Borrowing should never be over extended, aim for a maximum of 75% lending. Ensure that you can finance any borrowing throughout possible rental voids and changes in interest rates. Remember, as many first time buyers are struggling to get on the property ladder � THEY ARE RENTING! The rental income you obtain will pay the interest on your lending.

With 25% equity and 75% lending the average return on your investment is 45% - (45% ROI is based on the average UK growth of 11.3%pa over the last 4 decades � source ODPM)
Potentially, you can almost double your capital investment every 2 years.

Many investors will then use the increased equity in their property to fund further properties � in that way building up a property portfolio. This is recognized as �Gearing�.
What if you don�t have 25% deposit, but you still want to take advantage of the under market value properties out there? UK off plan property investment could be the solution to your problems.

With less than a 5% deposit you can invest in many UK off plan apartments in landmark projects that are set to be complete in 2, 3 and 4 yrs time. This method may work for you, by making a low capital investment now and allowing the property market to work through its cycle. For example in 2011 when the off plan apartment comes close to completion, it will only be at that time, you will need to arrange a mortgage.

2) Diversify your portfolio

Two types of diversification: The type of property you buy and the geographical location of it.
You will need to spread your property investments around the country to achieve an annual growth figure of 11.3% (which is the average across the whole of the UK over the last 4 decades � source ODPM). For example, in 2006, growth in London and the South East may have been around 16%, whilst in Scotland, it may have been 8%. If you had invested in properties in London and Scotland you would have achieved an average return of 12%.

�Historically, interest rates are still low�. 50% lower than in the early 90�s. If you can get a good fixed rate mortgage now for 3 or 5 yrs plus, why would you not invest?�

Research, research, research � regeneration plans and new rail and metro links are good indicators of up and coming areas and capital appreciation. Great access to transport links, restaurants, bars and local facilities. Knowing the area you are buying into and considering who your ideal tenants will be. Quality locations will attract quality tenants.
Concentrate on long term demand where supply is not exceeded. For example:
Glasgow Harbour

One of the largest regeneration projects in the UK and one of the major contributions to the growth of Scotland�s economy.

Glasgow Harbour is a 1.2 billion regeneration scheme at the waterfront of the city's revitalization. It is a 52 hectare (130 acre) development attracting International and local companies and large scale tourism and has a high quality mix of commercial, leisure, retail, and public space along with residential apartments.
The unique waterfront location on the banks on the River Clyde and the River Kelvin, minutes from Glasgow city centre. Property tycoon Raj Shastri says: "With all the building for the 2014 Commonwealth Games, Glasgow's economy is booming. A key factor is affordability - Scottish houses continue to be the most affordable in the UK. And capital growth in Glasgow increased 15 per cent last year." Glasgow Harbour master plan is working with MGM Mirage, who will provide the Regional Casino and hotel facilities within the development.

Seed Newsvine

Bookmark this article in your preferred program

Comments

Add Comment

Popular Articles in this cathegory

This article is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.