It would be wrong to say that property investment is everybody’s cake. It is not true because investing in properties is not a quick process. It can take years to pay the investors off. Patience is required, so if you are out in the market to earn money without putting in the effort then property investment is not for you. If done in the right way it can lead to great success and returns. You do have to be careful though as property investment is not without some risk involved in achieving financial success. Here is an interesting article that covers some of the risks in property investment. You can also learn from experts on YouTube on how to get started and choose the right properties
In order to answer the question as to, does property investment really work? You need to understand the true sense behind the word “work”. Well in the case of property investment, work refers to a positive increase in the return which is being paid to the investor. Many people have worked towards making property investment a retirement project, where they purchase some properties for almost 10 to 16 years and live off of the handsome income that is generated.
Let’s look into some workable methods for property investment.
Positive cash flow properties:
There is a certain belief which is seen amongst investors, and that is to buy properties that provide a positive cash flow. Without even thinking about the possible capital gains, they feel it is their key to success. The point to understand here is that at the end of the day your cash flow will be humble after deducting all the expenses incurred. With this mindset, it will take up a lot of years to reach a handsome income point.
Properties which guarantee a strong cash flow are often quite old themselves and are situated in far-off areas. When you go on to selling them, it can come as a challenge for you.
If as an investor you aim for a capital growth, then this surely is a better way to make your investment work. Now, you do not need to think that if a property is capital growth positive then it has to be cash flow negative. There are a lot of areas in the UK where properties offer a positive cash flow and their growth is guaranteed at a good rate. If the interest rates are low then such properties can prove to be cash flow positive with a deposit of 20%.
You can significantly come at the position of boosting the cash flow through the purchase of new properties; since depreciation will permit you to insist on a large tax refund.
Purchase old properties and sell after renovation:
The strategy whereby you purchase old properties and sell them off after the renovation is known as Flipping. Although this strategy is widely practiced and has proven to be extremely beneficial, it largely depends on factors such as time and experience. If the investor can invest time in addition to money, only then would it be practical enough to be to carry out this process.
Investors have to deal with the extra operational costs which will come their way while renovating an old property. This strategy requires to be practiced over and over again if you want a constant momentum of income. If done in a smart manner, it can work wonders for you.
Creation of a good strategy:
The major thing that property investors need to take into consideration is that shares and property are completely different from each other. Shares are an example of a liquid asset which you can immediately sell off as soon as your need for funds arises.
Properties do not come under the wing of liquid assets. The size of the investment is really big. Therefore, you cannot sell off a particular part of the property in order to raise funds. An example could be selling off of the kitchen to pay for your grocery expenses.
Due to the above-mentioned reasons, it is crucial for you to have a proper strategy, before investing your money in property. Your strategy should be such that is workable in the ongoing market trends. A good step, in this case, would be to take help from an experienced property advisor. He/she will make you aware of how your collected or saved wealth can fit into the business of property investment. They devise ways for you to make the most out of it.
With time you will get to know how the market affects property investment, and how you as a landlord will be able to take advantage of the deduction of taxes. There are a certain set of perks which landlords or property investors enjoy at large. You will have to come up with techniques that can work well in managing any possible risks in the near future.
These strategies will help you achieve a property investment portfolio which is workable. At the end of the day, survival holds more importance in property investment than other objectives. Cross it carefully and you will get on the road to success.