Property investment strategies
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.