Property Investment

In simple terms, property investment is the purchasing of any property with the intentions of making a profit over a period of time. Investment properties can be anything, ranging from a small one bedroom flat, to a single family dwelling, to a duplex, to an entire apartment building, from vacant land, to woodland and swampland, and even commercial property.  Investment properties are normally considered to be properties that the owner does not occupy, although sometimes the owner might occupy a portion and rent out the rest.

Investing in property can be a very lucrative and properties are purchased with the sole intent of deriving an income, either by renting the property, profiting over time from capital appreciation, buying low and selling high, or renovating the property and selling it for more than the purchase price.

The most exciting aspect of investing in property is the opportunity to “Leverage” other people’s time and money in your favor. There is a multitude of ways to leverage property to work in your favor, and I’ll share a few with you here.

  • A landlord does not need 100% of his own money to buy the investment. Often for as little as 10% (sometimes even less) he can purchase a property. He can do this by leveraging the banks money to help him buy an asset which will in turn make him money.
  • If a landlord has only put down 10% deposit to secure the purchase of the property, and the property’s capital appreciates by 10% per year, that’s a 100% return on his money per year.
  • A landlord uses the rent money paid to him by a tenant as leverage to help him pay off his mortgage.
  • The landlord can increase the value of his investment by improving the property. By adding an updated kitchen or building an extension to a building can (if done correctly) dramatically increase the property value and also the rental income.

Investing in property can be done on a very small scale and equally on a very large scale. An example of small scale property investing could be a homeowner that rents out a single room in his house. The money generated from the rent could be put towards the mortgage payments of the property, thus paying it off quicker. In some instances, money generated from this kind of rent equals or exceeds the mortgage payments, leaving the landlord free from having to pay his own mortgage.

An example of very, very large scale property investments would be somebody like Donald trump. Through his company, Donald Trump owns an incredible property portfolio. I have just visited his website and his portfolio includes over thirty luxury apartment buildings, more than ten hotels as well as an array of golf courses and spa resorts to name but a few. Donald Trump is a professional and hugely successful real estate investor who started out with relatively little.

Articles on Property Investment

How to increase property value - by Michael Pound
Every serious property investor should take the time to learn how to increase property value so s/he can maximise any returns on investment when it comes to selling

Why Invest in Property as apposed to shares? - by Michael Pound
Has an elderly person ever told you stories about how much they bought their first house for? I have a great aunt who bought her house in Cornwall 60 odd years ago for about £400. That same house today is worth around £250,000. What if she had bought 3 or 4 houses?

Off Plan Property Explained - By Juliet Cook
Off Plan Property buying is an increasingly common way for new build properties to be completed. Juliet Cook outlines the advantages and the process involved

Property Investment

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