Archive for the ‘Property Investment’ Category

Evaluating your property purchase

March 24, 2010

When you visit a house during an open house or an appointment with your property agent, take your time. Carefully weigh up the following factors before deciding if the property that you are looking to buy is right for you:

  • Price The price is the main criterion for most of us. Learn how you can or can not afford to pay, request a mortgage pre-approved before you start viewing any properties. Perform a thorough due diligence on the price of the property and in case of buying investment property for sale, make sure that the discount offered is genuine. Perform the due diligence before you even step out to see the property to save you time on being disappointed and wasting a trip if the price des not stack up.
  • Fees Yet, even if you can pay for a property mortgage, other property costs such as property taxes and service charges could put it out of your reach. In some new areas, property taxes are lower until the facilities and services such as sidewalks, parks, fire stations and schools are built. You must have an idea of future property taxes for properties you are considering.
  • Architecture Determine if you like the style of the house. Evaluate how the house will be easy to maintain and clean. If you are buying a rental property as a buy to let investment, then make sure that the property layout and number of rooms lend themselves to providing you the maximum rental value.
  • Alterations and size Ask yourself if the interior will meet your requirements today and tomorrow. Are there enough bedrooms and bathrooms? Is there a room for a home office or game room, if necessary? The garage is about the right size? Do you need a garage at the property? Is there enough storage space?(The old houses are full of charm and can sometimes be bigger offering more storage space.
  • Lot Size Again, you should consider your current and future needs. Review the property size for its rent ability to make sure it will appeal to the type of tenants you plan to target for the rentals. If it is to be a family home then does it have enough space for a family? Or are you buying the property for occupation by single people or couples who would rather have a smaller property with a smaller garden to manage with no lawn to mow
  • Landscaping Are you looking for a property requiring minimal landscaping and hence low management or looking for a property that you intend to occupy and want the charm of spending a few weeks a year in the garden? You need to assess the type of garden to assess the costs of maintenance. Its again a question of money and time
  • Maintenance and refurbishment Are you likely to need to upgrade the heating and other utilities? Does the water supply need work? Is the roof requiring replacement soon or in the coming years? Will you need to redesign your kitchen or bathroom soon? Consider these expenses as part of the purchase price when you speak with your buy to let mortgage advisor. To assess the overall expense, you would ideally want to carry out a thorough property survey to determine the exact costs of any further work required to bring the property up to the state you want it. A full survey requires a lengthy discussion and we will not go into any lengthy detail here.
  • Extras Know exactly what is included in the price of the house and what is not. Appliances, curtains, blinds, central vacuum and air conditioners If you are in doubt, ask questions and get answers in writing.
  • General Condition Should the exterior should be repainted, does it need rendering, repairing, brickwork replacing… or any other extra work? The windows; are they safe and waterproof? Is exterior lighting sufficient? Are there any cracks in walls or floors? Does the flooring need replacing soon? Is there an alarm system? Is the water pressure sufficient? Do the hot water or cold water taps do they work properly? Is the heating system in working order? Does the property need rewiring? Check for damp, mould, signs of wood rot or any sign of wood worm, any other structural problems.

The idea is to make sure that you do thorough homework on the property and make sure that you don’t end up with any nasty surprises later down the line after the purchase!

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Protecting Against Renovation Property Risks

February 28, 2010

It’s all about risk assessment…

This is especially true when it comes to property investment. Property investment is guaranteed to deliver healthy long term profits for many people and hence makes it a very attractive proposition. However, it is an investment that should not be made lightly. People should be aware of the facts surrounding the property investment business. Property investment is more than just easy profit, as there is a decent potential of making bad investments

If you plan to invest in renovation property, you must take precautions that will limit your risk and exposure when you can. If you cannot reduce the risk, be prepared for financial loss and be mentally prepared to accept potentially life changing losses. In property investment there are several risks that you need to look out for, including:

Loss of investment

When you are dealing with property, it is possible that you may lose some or a lot of the investment that you make to purchase your property. If your investment is high in a renovation project but the demand is low for the end product, then you may be dealt a devastating blow if your property does not sell for at the price or the speed at which you expected. So researching the market to choose a property that is in the right area and in demand is critical. Also research the pricing levels of the properties in the area and what the end cost will be to renovate a property and how that is likely to affect any profit (or loss) when it comes to renovating and selling.

In addition, do the obvious and be aware of the market conditions within which you are planning to sell. Be aware of the potential of a non sale. If you strategy is to renovate, hold and rent the property then assess the rental potential of the market and make sure that you get a suitable return to keep you in the black against your outgoings and mortgage.

Also make sure you take out appropriate insurance cover during the renovation process to make sure that you are covered against unexpected occurrences.

Cover Your Risk

Remember that in property investment, there are sometimes unforeseen costs that you may not initially allow for. Here are some examples:

Natural Disasters - the economy collapses - the local market is crumbling - people change their minds when you are trying to sell - accidents or injury claims when someone is working on your property and so on

Anyone of these things can lead to real consequences and can end up being catastrophic. The above events are totally beyond your control. Therefore you must be prepared to account for such risk.

In addition to these risks, there is the risk of discovering unexpected flaws in the actual property. Most investors tend to abandon a good inspection and often end up discovering unwanted and sometimes costly problems. The repairs will cost money and these costs will eat into any potential profit on the horizon. So never buy with your “eyes closed”.

If you have found problems with your property, you generally have two options:

- Firstly, you can undertake the repair work yourself before putting the house on the market.

- Second, you can sell the property as is and reveal the problems to potential buyers.

To save the hassle, it is very important to locate these problems before buying the house. Make a careful inspection of the house and that way you will discover any potential costly faults that may adversely affect your property investment. This will not only save work but will also save a lot of money.

Keep in mind that you should not let the two risks to stop you from investing in this market. However, as an investor, you need to clearly identify these risks so that they are priced into the investment and assessed accordingly to make sure that the anything you buy is worth buying in the first place.

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Mortgage Broker Expertise

December 26, 2009

A mortgage broker with the right expertise is an important factor that should be considered when choosing a mortgage broker [See: Choosing a mortgage broker]

Over the years, many mortgage lenders have added or changed dozens of mortgage products. There are hundreds of mortgage products available for borrowers and trying to choose the right mortgage product can be daunting. Choosing mortgages is a full time job. It requires the mortgage broker to know all the options, products and strategies in the mortgage market today.

Some signs of an expert mortgage broker

When you contact a mortgage broker, look for signs to determine how knowledgeable the broker is likely to be. Pay particular attention to the following:

  1. He does not speak only of a mortgage product (eg 5 year fixed), but several opportunities to handle the mortgage strategy.
  2. He knows the factors that influence the rise and fall of interest rates and can explain clearly the current situation in the cycle of interest rates.
  3. He knows all the products offered by all lenders in the market and can easily compare. As an example, the best variable rate of 5 years is with the lender XYZ because … while the best mortgage line of credit is offered by ZYX because …
  4. He is able to compare the best rates available for each lender and at the same time you can select one with the best offer.
  5. The broker tries to understand your situation and your goals.
  6. He shares with you ideas about how your mortgage may be repaid quickly.
  7. He is authorized by the Financial Services Authority (FSA)
  8. He works for a company that has a good volume of business
  9. He explains clearly and easily the concepts and ideas of more advanced mortgages
  10. A new trend in the mortgage market is to see more and more mortgage brokers who specialize in a certain market area.

There are specialists for:

  • Mortgage customers who have a good credit score.
  • Bad credit mortgage clients with less than perfect credit history.
  • Mortgages for construction.
  • Mortgages for residential property buyers
  • Buy to let mortgage specialists
  • Commercial mortgage specialists

The fact that some consultants specialize enables them to better understand the nuances and details of specific mortgages and can better understand a strategy and products available in that specific mortgage market.

The expertise of your mortgage consultant will be a big benefit for your property purchasing strategy and could help you save thousands of pounds.

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Does your Property Need a Survey?

October 17, 2009

Most of the time property buyers look into buy to let or commercial mortgage financing when purchasing properties. Now, if you are into mortgage financing, a survey of the property is required before the bank approves your mortgage application. However, cash purchases do not require a survey of the property. The survey is optional and will rest on the preference of the potential buyer. All buyers must survey the property they are eyeing just to make sure that the both the investment and physical foundation is strong and that no major repair is needed.

If you are a buyer and you want to be thorough in your property viewing, have a surveyor accompany you. The cost of the survey is fairly minimal; just about a couple hundred pounds will normally do to pay for the survey, maybe even less. However, if the property you want to be surveyed is exceptionally large, if it is waterfront or heavily wooded, if it is located in a rough terrain, then be prepared to pay a bit more for a more detailed survey.

So why should a buyer conduct a survey on a property? Well a property survey does not only provide you with information on the internal aspects of the house, but it will also provide you with essential information regarding easements, encroachments and right-of-ways on the property. The issue of easement and right-of-way is not that big of a deal, yet it is still valuable to know. Encroachments and infringements issues should be corrected before you close the deal with the property owner. If there is a neighbor’s shed in the property you want to buy, ask the owner to remove the shed first before you close your deal for you might have problem with that in the future.

Now, if you do not have the funds to hire a professional surveyor and the house you are about to buy is small and is fairly new, then you can probably do the survey yourself. There are just some basic areas you need to focus on in order to do the survey properly. First of all, look for malicious roots. Roots of large trees can interfere with the foundation of the house so if you see one, have it removed immediately. Check also the downpipes and the drains. Inspect the walls and check for any cracks or bulges, also the roof. Check the boiler. Feel the temperature inside the house and see for yourself if it is properly heated. Ask the owner how old is the boiler and when it was last serviced. In addition, check the property for damp, any pest infestations in walls or floor boards, check for any structural movements or damage (a major problem to fix), any cracks in the walls, the roof, ceilings, any musky damp smell, flooring and state of the floor boards, the attic, internal doors, state of the décor, signs of any attempts to cover up any problems such as damp and cracks, guttering, leaks, state of fixtures and fittings state of the electric wiring, check loft spaces thoroughly, state of the garden, out buildings just to name a few.

Buying a property without a thorough professional survey is a dangerous sample to take and it must be conducted to ensure that you don’t end up with a disastrous property investment.

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Renting vs. Buying Property

October 12, 2009

A lot of people are having a tough time deciding whether to buy their own house or rent first. There are a lot of factors to consider when making this decision. Buying and renting a house has its own advantages and disadvantages that home seekers need to know first before having an informed decision.

The advantage of buying a property is that its rates depend largely on the state of the housing market. This is very significant especially now when the economy is down. A lot of people are turning away from buying a house because they fear that they might not be able to keep up with the monthly mortgage payments. Also, buy to let and commercial mortgage products are hard to obtain. Banks are tight on their mortgage lending nowadays knowing that the economy is not letting up anytime soon.

Also, on top of the monthly payments, you also have to worry about the legal fees, stamp duty and agent fees. In the long run, the disadvantage of owning your own property is that you have to take note of the maintenance of the property and all the cost that goes with it.

On the other hand, the big advantage of owning a house is that you will be purchasing a big investment. Buying a house adds to your personal assets. A lot of people have already become rich through property investing. Also, you can do whatever renovation and redecoration you desire with your house. You can add a garage, a porch or even a new bedroom.. The possibilities are enormous for you to explore the full potential of the space that you buy.

Buying house also means that you don’t end up wasting money on renting a property. If you ask a lot of home owners they would consider renting a property as good as burning their hard earned cash. Imagine, paying monthly rent and bills for a house that will never be yours. Plus you will always have the thought of eviction and non-renewal of contract hanging over your head every day. You do not have control of a landlord who may at anytime decide to rent out your place to a new tenant. You cannot do anything else but to look for another property to live in.

The advantage of renting is that people who are only starting their career can have a place to live with relatively low start up cost. This way, you can save enough if ever you decide to buy a house in the future. Renting also gives more flexibility. If your job requires you to move to different places regularly, then renting might be the house option for you. However, for the long term, buying a property should always be on the priority list to ensure that you get on the property ladder quickly and potentially get started in your property investment career. The earlier you jump on the property ladder, the earlier you can put your money to work to build property assets which will be worth considerably more in the years to come.

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Sell Your Property Creatively

October 11, 2009

When it comes to buying and selling property, the buyer always has a lot of options to choose from different types of houses, different designs and locations. Finding the right property is normally relatively easy. The seller, however normally has the more challenging task of selling their property and making it more noticeable than the competition. Sellers always need to be on the lookout for creative and innovative ways in which they can sell their house and turn their properties into money making investments.

Sometimes, the most effective way to sell your house is to offer creative ways of financing. Because of your financing options, a lot of potential buyers may find your offer more attractive when compared to other property which may have better feature than yours. If you do not know other ways of financing aside from loaning from the bank, read this article through up to the very end.

One financing option you can offer your buyers is to rent with the option to buy. This is more commonly known in the property business as the Rent to Own Option. The contract for this type of financing states that the buyer has to sign a lease to rent the property and a percentage of their monthly payment will go towards the down payment, debt payoff and closing cost of the entire property. The contract also states that at the end of the lease term, the buyer or the renter of the house has the option to totally purchase the property with the portion of their rent to add as payment towards the purchase.

Another financing option is the lease/purchase. This is quite similar to the Rent to Own -Option. The buyer will also sign a lease agreement where they will rent the property first. The difference is that they do not have the option to buy the house but they are actually required to buy it at the end of the lease term. The amount of the property rent may be below or at par with the market rate; this will just depend on how long the buyer wants to lease the property and how quick the buyer can consummate the final purchase.

The third creative financing option you can offer your buyer is called buyer possession with a delayed closing. This type of financing is beneficial for those looking for a place to live as soon as possible while their residential or commercial mortgage is being processed. With this option, the buyer signs a purchase agreement and is able to take possession of the property even before the closing of the transaction.

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Tips for Property Investment Success

October 8, 2009

If you are looking at new ways to invest, then there is nothing more profitable and successful than investing in property. It is the type of investment that is almost always on the rise and is why you can be sure of the significant dividend it will bring you in the future.

Investing in profitable property is not always about having the financial capability to do so. Even if you have the money to buy a property investment, your investment will not grow unless you know what you are doing. You have to choose the right property in which to invest. You have to know what to do with the property you just bought and you also have to know how to advertise the properly for reselling or renting.

Listed below are five basic tried and tested property investment tips that you can copy.

Tip No. 1 – Shop around and research before buying. Do not buy the first property you see. Do your research. Before you step out of your house to drive around and look for properties, turn on your computer first and search online. You should seek out the latest trends in the property market so you know what to look for and where to look for when you start your search for the right property. There are always plenty of property bargains to be had so buy with patience and a well researched and informed choice.

Tip No. 2 – Take into account of the fact that the property you are about to buy is for your future tenants or your potential buyers. You have to fix and present houses in a way that is attractive to the tenant or potential buyer without really hurting your budget. The renovation and conversions that you should make should add value and function to the property and not just to the beauty. A sprawling lawn may be a great addition if you are the one who will live in the house. But if you bought it as an investment, it is better for you to fix the kitchen or bathroom so that you can sell the property for a much higher value, thus adding more profit in your pocket.

Tip No. 3 – Do not put down any money if you cannot afford to buy the house. Over stretching your budget when buying property can impact any contingency money that you may need for renovation and rental management costs. So plan your budget carefully.

Tip No. 4. Don’t get emotionally attached to any purchase. Put aside any property fantasies and make your decisions based purely on your research and investment financial analysis. We don’t want to be worrying about the colour of carpets and walls if the plan is to buy for investment.

Tip No. 5. Have the right funding – Make sure you choose the most suitable funding for your purchase and choose the right residential or commercial mortgage. There are literally hundreds of mortgage products out there and choosing the right mortgage deal will potentially save you a significant amount of money on the long term.

Tip No. 6 – Seek professional help. Experienced people like mortgage brokers, solicitors, estate agents agent, surveyors, building contractors and rental/ property management agents are crucial to making your investments work.

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London Property

October 8, 2009

London remains the prime area for investment opportunities not only in UK but also all throughout Europe. The prices for the properties in Central London rose up to 22% in 2006 and 18% in 2007 according to the International Property Consultants Savills. In terms of the whole area of London, historically the Central London properties are the best performing and it should continue to outperform the rest of the capital and even the whole of the United Kingdom for when the recovery fully takes effect.

Prime properties in Central London are found in Mayfair and St. James. The improvements in the Westminster part during the past ten years contributed largely to the price increase of the properties there.

In West London, two of the most prestigious areas are Notting Hill and Holland Park. Both are tagged as the smartest areas in London. Prime properties in neighboring areas include Bayswater and Marylebone.

With regards to the Northern Part of London, there has been a shift of business to the Docklands and Canary Wharf due to the conversion of many riverside warehouses. There is also an improved property price seen in Shad Thames, The Isle of Dogs and Wapping.

During the past five years, the areas of Wimbledon, Richmond, Wandsworth, Clapham and Battersea are all considered to be prime properties locations in South-West London.

Property Investors can also expect to earn from properties in Belgravia, Chelsea and Kensington as these areas are deemed to be the most expensive and highly regarded in all of the United Kingdom. The areas mentioned have a well-maintained stock of attractive period houses, smart shops and are very accessible to the main city.

International investors in UK usually come from oil rich countries such as Russia, Kazakhstan and the Middle East. If you are a buy to let property investor and you want to put your money in an area where the forecasted growth is historically high, invest in a UK London property.

UK residential property prices rose by an astonishing 410% between the years 1986 and 2006 as reported by the Housing Statistics Briefing, English Partnerships in September 2006. The economy in UK remains relatively stable in spite of global economic crisis. UK already recovered some of its loss by the middle-end of 2009 proving that the country still remains as an exceptional location for investment. While the British pound became cheaper by almost as much as 30% compared to the Euro and US dollar in the year 1997, it is expected to regain its powerful position in the year 2010.

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Basics of Property Auctions

October 7, 2009

If you are in search for a traditional route of finding investment properties in the UK then property auction is one of the oldest forms of property investing and an age old favourite for those looking for exciting bargains. Information on property auctions can be easily found both in the local media and the internet. Announcement for property auction is normally advertised a few weeks in advance before the actual auction takes place. Look out for announcements in your local newspapers and the internet.

If you are reviewing a specific auction and want more information about the properties to be sold, go to the auctioneer and buy yourself an auction catalogue. The catalogues (if not free) are normally sold at a nominal fee. You will see detailed information regarding the property sale, the prices, viewing times and any special concerns of the property, if any. Make sure that you appoint a solicitor to do check any documentation and contracts of sale for the transaction ahead of the auction.

Auction houses are not commonly known for offering the best of presented properties. A lot of the properties sold at auctions are repossessions, receiver stock, bankrupt stock, under developed properties, properties from people who want to sell them quickly for one reason or the other, so in many cases the properties are not well maintained. So when viewing the properties of your choice, have a surveyor or builder with you so you can have them check out the foundation of the house and other concerns as well. This is strongly advised as bidding on a property that you have not inspected can potentially result in a disastrous purchase. A proper inspection will uncover any hidden and unwanted surprises that may adversely affect the potential investment and help you plan a budget for any potential work that may be required to bring the property into good habitable order. A thorough inspection will tell you if a property is worth bidding on all together and the scale of any re-development work.

An auction property will normally have two prices associated with it, a guide price and a reserve price. Remember that a guide price is different to the reserve price. The guide price is the rate at which the property is expected to sell and the reserve price is the rate at which the owner is expecting to get. Guide prices are just that, a guide that is for information purpose only and should not be relied upon as an indication of the reserve price.

The auction house typically lays down some rules regarding property purchasing and time constraints. A 10 percent deposit is required at the day of the auction. The purchase should be completed by the end of the 28 days after the auction; this is reduced to 14 days for some repossessed homes. With the little time span you should make sure that you have all your finances, whether that be buy to let mortgage or a commercial mortgage or cash before you join any UK property auctions.

At the auction house, each property is given approximately three minutes for bidding. This is simply the average time and not any rule as such. Once the hammer resounds, you have to immediately pay 10 percent of the price of the property and sign the contract of sale. Bid on the right property and bid only within your limits to achieve the best deal. If you do not yet feel comfortable regarding the whole auction process, you can always attend a few on a trial basis before actually bidding.

A good tip for bidding at auction is not to get emotionally attached with either the bidding or the property. Many beginners make the mistake of over bidding beyond their budget for a property because they get emotional, if not excited, for the property of their choice. It is IMPERATIVE that you stick to your original budget to ensure a good investment purchase. If you are worried that you might get emotionally attached to a property or that you may exceed your budget limits, ask a friend or a solicitor to do the bidding on your behalf. If you cannot personally attend an auction for whatever reason, you may still join one via the telephone or through the internet.

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Property Downturn Biting? Why Not Upgrade?

October 5, 2009

The economy is on a downturn and it affects the property market now more than ever. Interest rates are at an all time low but yet property prices are still stagnant Property owners are looking for ways to cash in on their investments fast but it can seem difficult to do in this climate.

One solution to this problem is to look into small scale development. A lot of property owners do this by just upgrading what they already have. They can build or extend a new bathroom or kitchen, the two main selling points of a house. A fresh extension and cost from £25,000 upwards, depending on where you are.

Another way to add value to your existing property is to extend the top floor into the roof space. This way, you can double the size of the living room or build an extra bedroom all for a small outlay. This is advisable in areas that have high value properties since the residential floor space is at the premium. An example of such area is London. Capital appreciation is at its finest for property owners in London. Just take a residential street of Chiswick, where many of the houses have already built their own loft. Not only does this increase the size of the house per square meter, it also increases the volume of the flat. With a start up cost of £25,000 for the loft creation, you can add up to £100,000 on its original value once the loft is added.

The cost of building a loft differs from one city to another. In London, building work is more expensive compared to the Northern parts of the country. If you want to have an idea on how much the building work will cost for your area, you might want to check out a Property Makeover Guide or speak with a few builders.. Know the size of the construction needed and the number of windows you want to put up in order to achieve a realistic estimate on the cost.

The main thing is to ensure that addition of any space to your property will have a positive effect on the property price of your house. Make sure that you research any project carefully and speak with local estate agents to get an idea of what value your property will be after adding any space. Then do a simple calculation to make sure that the amount of spend required warrants the extension against new value. You don’t want to be running getting a remortgage or a commercial mortgage tp spend money on adding space if there is no benefit of increase in value,

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