Making the decision to become a professional property developer and invest in property is no easy step. Is it one that requires a lot of thought, consideration and time to ensure you are making the right decision.
If you too are struggling to decide if property development is the right route for you, then the following FAQ can help put all your concerns to rest:
1. What is property investment?
There are many misconceptions about property investment and what it exactly entails. The most common route you will encounter – and hear of – is renovation, where you buy a property with the purpose of doing it up and selling it.
However, whilst this niche was profitable during the property boom of 2007, this investment technique unfortunately is less effective during economic downturns. That is unless you have got the cash to turn the property around fast and quickly get it back on the market.
The other route however – and the one we recommend to you – is buy-to-let. With buy-to-let, you can invest in property based on the areas tenancy demand and ability to produce positive cash flows, and generate month on month incomes simply by leasing your property development to tenants. There is no need to sell…
2. What makes property investment different to stocks, bonds or shares?
The fact that it will never go into zero values! Although stocks, bonds and shares can help you to experience annual returns of up to 25%, they are also prone to dipping down to -8% leaving YOU out of pocket.
With property it is a much different story. Even in a recession, properties can still produce annual returns of up to 25% – if you invest correctly – making it a much safer, more stable investment route.
3. Do I need capital to invest?
No. Equip yourself with the right strategies, and it is possible to invest in property using little if any of your money and purchase properties without putting your own home at risk.
Investment strategies such as No Money Down or No Deposit Down are specifically designed to help you invest with minimal costs involved. All you will have to worry about is your legal fees and stamp duties; yet even then it is possible to negotiate such property discounts that your property will essentially pay for itself.
4. Do I need experience?
Despite what the media would like you to believe, you don’t have to have prior property investment experience to make a profit from property.
The key to achieving long term successful investments is to: equip your property portfolio with the right investment strategies; negotiate the right property price discounts, but more importantly ensure that you only invest in properties which can produce the positive cash flows and tenancy demand you need.
Attending a property development course can help to equip you with such investment strategies. Just make sure that you thoroughly research these property development courses first, check their history/case studies and only sign up to a course that can offer you at least 5 investment strategies.
REMEMBER: Not all investment strategies will work in all financial climates, which is why having plenty of choice can come in handy.
5. How do banks lend money for investment property?
Unlike applying for a mortgage where your lending amount is based on how much you earn, buy to let investment is assessed very differently.
Here, all lenders require is that your property is able to generate 125% of its mortgage repayments through buy to let. Meaning choose wisely and it is possible to invest in bigger and better properties, than you normally would be able to if it was based on your salary.
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