Very many people have become wealthy through 'buy to let', and many are still in the process of doing the same with build to let. Les us describe the concept of buy to let and then take it a stage further and see how the profit can really stack up.
The theory of buy to let
- You use the equity you have or by some other means raise a deposit for a property; - You get a buy to let mortgage, usually at 85% of the value; - You buy a property, and rent it out, using the deposit and mortgage; - The rent covers most, if not all, of the mortgage and running costs.
When property prices go up
- you now have more equity, which you can use against a loan or mortgage to throw up the extra cash; - you use this cash as a deposit for another house obtained in the same way as above. This can be repeated as many times as you like, only restricted by how much the properties increase in price and the equity you can make available. As the number of properties increase the cycle speeds up, as you have more properties whose equities can be added together. Some people have got hundreds of houses now, while quite a large number have well over 20 each, very many have 10 or more.
You can maximize the growth rate by: - clever buying, buying under the current value self build, making a 25 to 60% saving on purchase costs; - spotting properties that can be increased in value with minimal work, and cost selecting areas where prices will increase rapidly; - selecting areas where the demand will increase rents, and keep your properties full; - making things happen fast getting started as soon as possible.
Build to let
The advantages in self build, over going and buying a new estate house is cost, and knowing the quality of the build is high and you will not have problems in the future. Any newer house should require less maintenance and be far easier to keep let all the time than older properties.
As the area becomes established, landscaped etc, rents will reflect this increased quality feel.
It can also allow people to get involved who have less capital and those with the same amount of capital to get a number of builds started at the same time.
This is because: - You spend less on each property saving 25-60% - You can get a 95% loan/mortgage on a self build (land and construction costs) which can be remortgaged to 85% when completed as a buy to let, using the equity that is already in the property means you need no further deposit, and most likely will get a large sum back to go into the next step. - Although some do build far larger, and more highly specified houses by self build than are available conventionally, this does not need to be the case, and you can, by the same methods and means, build properties of any style, size or for any market.
To get into property owning or to add an individual property you can see, can be achieved by raising just 5% of a far smaller sum, and even this can be recovered as soon as the house is built.
Investment in property and real estate is the buzzword of today's investors. Today an investment in property and real estate promises higher returns. But investment in property is also equally full of risks too despite being profitable. If an individual is planning for an investment in the property market is not at all aware about it or the latest scenario in this business then the individual or investor might face a lot of risks as well as not being able to earn any returns or profit.
Therefore an individual must be very cautious before making any kind of investment decision. There are several steps and procedures to make an investment in property. By following these steps an individual can make a lot of money with minimum amount of investment. The first and foremost thing to know is what exactly a property investment is all about, because there are some investors who actually know nothing about this kind of business.
The first and foremost thing to do is to have a brief and thorough idea about such kind of investment. Property investment or Real Estate investment is referred to the purchase of land or property at one price and selling that particular property at a much higher price in the distant future. The return on investment also depends on the operational cost of that particular property.
The property that is held by an investor can be a rented property, industrial or commercial property or may be a personal or residential property. Soon after investment, an individual starts looking for the income that will soon be generated because in case of property investment, the return starts generating with respect to the price the property has been purchased. It is basically the rise in valuation of land or property or in other words the increment in the capital valuation of the acquired property.
Since the basic concept of investment in property has been mentioned briefly and now the next part is to get to know the best field of this business where it will be considered to be the best investment option or which part is much more suitable to invest the hard earned money to generate maximum returns. An individual can invest in various kinds of properties. It can be a personal or residential, commercial or industrial or rented. A thorough information is a must have regarding all these investment options. Only then the decision regarding investment is to be made.
The real estate sector has seen a tremendous growth in the past couple of years. Not even in the United States, countries like Bulgaria and India are also growing in the real estate business. By seeing this rapid pace of growth of this sector a new concept has evolved which is termed as Property Stock Market. The inventor of this system is said to be Ftsie.com. It is said to be the only property stock market in the world. Here an individual can purchase and sell properties instantly. Trading account made by the firm at free of cost. A US$20 amount investment is all one need to invest at an initial stage.
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