Top property investment tips for 2009
Well we are marching through 2009 at quite a pace, and things are looking up right now. I'd like to report that a few estate agent friends of mine have had a much improved few weeks as prices start to show real value and are now more accessible for first time buyers and investors. Contrary to the constant barrage of fear mongering by the media, most people are still in work and many still have a decent amount of money to invest. Most will also be aware that now is the best time to buy just about everything, judging by the deals that are out there. Property therefore is no different.
With this in mind, I thought I would offer some of my top tips when assessing property investments:
Decide what you want – it is important you get your strategy right from the start. Do you want income or capital growth for example? Do you want short-term or long-term? Once you know what you want, it is easier to decide which type of deals to enquire about. If you're unsure ask yourself if you want to have cash now, or cash later? In a down market, many investors wish to generate income now rather than speculate on getting it in 2 years time, mainly because they need it now. In an upmarket, many tend to do the opposite and speculate as immediate income is less important.
Be prepared for ups and downs! As good as an investment may sound when you are looking at it, do understand that, barring extremely secure guarantees, it may not work out. Is this an amount of money you are prepared to lose? If not, you may wish to go for something more secure like bonds, or lower the amount you wish to put into a property deal.
Do your own research – this is critical, not just for your peace of mind, but so you become better at investing. Don't just take your broker's word for it, check the deal out. Are the rental comparables offered correct for the area? Is there plenty of independent evidence to support the perceived investment case? What other developments has the supplier built before and were they delivered as promised?
Ask for evidence to back everything up that is said – following on from conducting your own research; make sure any claim made is backed with evidence. Ask for title and building permits if it is an off-plan deal and get them checked out. If the product involves insurance, ask for a copy of the policy and check for loopholes. If you are buying off-plan, make sure you have copies of all contracts you will be signing so you don't have any nasty surprises further down the line. It takes some extra time and effort it is worth it in the long run. If someone does not want to supply evidence, you have to question why that is!
View the property if possible – many, many investors have bought property over the phone, which may or may not be a good thing to do. If the deal is off-plan there is nothing to see but land, but going reassures you that the location is a good one. If the property is already built, go and view it if you can. Check out the condition and satisfy yourself.
Big is not always good – when using service partners (i.e. rental management companies, lawyers, accountants, etc.) using the most well-known brand might not be the best move. Quite often the bigger companies have less time for you or are less willing to bend their rules. Local family run companies can quite often offer the decent, thorough and personal service you will be looking for. Again it is important to spend time checking these companies out.
Consider different styles of property deals – there are a number of different types of deals on the table today, such as off-plan, below market value (BMV) deals, Developer Joint Venture schemes, or in different sectors such as student lets, short business lets and nursing homes. Have a good hunt around to find the type of deal that suits or diversify your risk by investing in a variety.
Value a good broker – as much as many criticise the role of the middleman, he or she quite often is the one putting the deal together, not the developer or supplier. As a broker myself I may be biased, but a lot of work goes into structuring the deals and bringing them to market, as well as assessing which companies to work with. Quite often the broker has a better overall knowledge of the market place than the supplier does so use and value their service!
Article provided by Discover & Invest