What Makes a Good Investment Property?
When you choose to invest in property there are a few questions you need to ask yourself before rushing in and buying a place that seems like a bargain. Think about what you can put in and what you want to take out to make sure you choose a good investment for you.
Buying an investment property will usually involve some work to either add value or optimise it for renting out such as changing a house to flats or offices.
However if you have money sat in a bank earning the 0.5% interest that is about standard nowadays but you don’t want a big job you could simply buy a property that is in good condition and ready to rent out; the rent even after costs should be more than you would get in interest and a letting agent can handle the work. After the markets have improved and prices have gone up sell your property for more. These properties sadly are few and far between and sought after meaning there may be little potential to get a bargain, look out for opportunities for private sales though.
If you do plan to do some work to your investment property there is a lot more to think about:
for a start consider your budget.Of course you can’t buy a property unless you have the budget to start with but think about the whole budget, some properties you may be able to do up quickly perhaps changing the usage to something that is easier to rent and then start getting money in, some places you may be able to buy give a quick spruce up and add value: these are often popular types of projects for first timers. At other times you may need a big budget so that you can take a property that may be in a dilapidated state and bring it back to the point where it will either sell or you can rent it. You could also want to convert a house into individual flats but that may be a major undertaking and could be more expensive than you think.
A good investment property may well be one that you can do a lot of the work on yourself ...
You may well need to bring in professionals for electrics and plumbing but the more you can do yourself the more you can earn in profit on it; think if you could make a profit simply by using other people to do the work then everybody would do it. Some people will work on properties full time others can only spare some of their spare time, a lot of people make the mistake of overestimating how long they can put in though or how long things will take, try to allow for the unexpected in all areas of property development. In fact properties with little potential for the unexpected may make the best investment property for many people who are new to developing investment properties.
Do you want to make money from your property long term or short term?
If you want to make a quick return it will mean you have to find something that will take a lot of work which you can do cheaply and then sell for much more than your costs, the amount you earn could be equal to or slightly more than you could earn putting the same hours into another job but you may well feel that it beats your current 9 to 5 desk job. Long term you can find a property that you can rent and sell as the housing market improves, look at what type of housing is needed in the area if there’s not enough flats buy a house and convert it, if there’s not enough houses and too many flats then buy a house that’s been made into flats and turn it back into a house. You may also want to consider commercial property or even land, look at how an area is developing if you know a new road is coming soon then land that could be used for a retail park or industrial estate may go up in value or buy existing units that may get a boost.
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