Financing: Lenders generally lend up to 65 percent of the value of the property for investment purposes as they consider it a high risk one. If you hold equity in some concern , you can borrow from those sources to maximize your mortgage and financing as you are allowed to use mortgage interest paid on your investment property to reduce the amount of income and hence tax paid on your investment property.
Location: Investments close to major shopping, transportation, schools and amenities will attract prospective tenants. Tenants having one vehicle will require these types of amenities to be located close to the property. Higher rent is guaranteed in these locations.
Maintenance free investment: A high-rise condominium will allow you the most flexibility and least amount of effort and maintenance during the tenancy than other type of property. The second choice is in townhouse as most of the exterior maintenance, such as snow shoveling and lawn and garden maintenance will be taken care of by the condo corporation.
Appreciation of property: Different properties appreciate at different rates, all the factors being equal. If a high-rise condo has an appreciation of 10% in a year, a townhouse may appreciate 12 to 14% and a freehold property may increase 15% or further. This larger appreciation would be offset by the fact that more maintenance may be needed by you.
Expenses: You should consider all the expenses while buying and selling real estate investment property. These may include the principal and interest costs associated with the mortgage or financing on the property, the annual taxes and any monthly maintenance fees if the property is a condominium.
Tenants: You should not overlook the quality of tenant. A tenant who has the ability to pay the rent and a good history of paying the rent is always preferred. The second most important consideration is to make sure that your tenant will take care of the property for you in your absence.
Tenant Inquiry: You need to decide to inquire the type of tenant by yourself or use a real estate agent. It has been seen that the quality of the tenants are usually better if a real estate agent is employed.
Broadly speaking, your personal situation, financial ability and degree of involvement in your real estate investment property will ultimately decide the type of property that you will purchase.
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: Media City UK ? Long Term Demand ? Manchester's new London Docklands ? Set to be completed in 2011
The UK's first Media City ? 200 acre site at Salford Quays, Manchester. An international hub, the UK's leading broadcast, media and technology companies at its heart. Media City is being developed by Peel Holdings 5* development. Media Cities across the globe include Singapore, Copenhagen, Seoul & Dubai. Confirmation now of the BBC's relocation of five departments from London to media city: UK at Salford Quays has lead to many other large corporations and business to relocate on completion of the Media City in 2011. The New BBC offices will be accountable for 18% of Europe's media output. Media City UK will create employment for 15,500 people; there will be 7000,000 square meters of floor space. With some off plan apartments only requesting deposits as low as 3.33%, investing in around Media City: UK, Salford Quays could be a viable option for you.
Both Phil Laboon & Sara030 Huck030 are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Phil Laboon has sinced written about articles on various topics from Science, Finances and Property Investment. Phil LaBoon is a well known author who writes articles on finance and investment, real estate, etc. for . Phil Laboon's top article generates over 5400 views. to your Favourites.
Sara030 Huck030 has sinced written about articles on various topics from AutoResponders, Property Investment. This article was written by Sara Huck from, who manage the. Sara030 Huck030's top article generates over 1900 views. to your Favourites.