London is an area known for very high house prices and a booming economy. It is a city that offers excellent opportunities for investment in nearly all the boroughs.
Property investment is an extraordinary form of business. If it’s done correctly, it’s possible to make a lot of profit from it. It’s one of the four most common types of investment because usually, it’s very reliable.
However, there are still risks involved, so you must be sure of what you’re doing before getting involved in property investment.
To help our beginners of property investment, here is an explanation of what property investment is and how you can use these techniques in the City of London.
Property investment usually involves buying a house with plans to improve it or wait for prices to rise. By doing this, the value of the house increases and you can either rent it out or sell it to get yourself a nice profit.
With property investment, you need to decide whether to rent the house out or sell it. Renting a house provides you with a stream of income for an extended period. Selling the house can make you a pretty significant profit- tens of thousands of pounds– but you only receive that money once.
The great thing about property investment is that you only need one house to get the ball rolling! Many large property investment firms start with only one asset.
Once you receive enough profit from one house, you can purchase another house to gain even more profit. This domino effect allows you to own and make profits on multiple houses in only a few years.
Like any type of investment, there are always risks involved. You have probably heard of property investments that have gone wrong, and the investor has lost out on a lot of money.
To try and avoid these situations, you must know all the main risks involved with property investment.
If you plan to buy a property to rent it out, you can only profit if you have someone living in the house. If you cannot find a tenant, your property will soon become a curse and not a blessing!
Maintenance or mortgage payments will soon stack up if there is no rent money coming in.
Property prices are always moving. Typically, in London, they are on the rise, but this isn’t always guaranteed. If house prices suddenly drop after you purchase the house, then you might be set to lose a lot of money.
Try and get expert advice on house price predictions. If the area has a secure housing market, likely, house prices will not fall suddenly.
When you start making property investments and start making profits, it can be tempting to add all of your money to the business to try. If you’re making profits, of course, you’ll want to try and make more!
This is not a great idea because if something happens in the future and you’re in urgent need of cash, it will take a while to get that money out. Houses can take a very long time to sell.
When investing in properties, make sure you take on a project you know you can handle, especially if you’re buying the house through a mortgage. If anything goes wrong and you can’t make mortgage repayments, you risk your house getting repossessed.
Demand for housing in London is always very high. So most of the time, you won’t be searching for a tenant or a new buyer for a very long time.
There’s quite a lot of new-builds going on at the moment in London to cope with the high demand for houses. This is another beautiful opportunity for property investment because you can buy off-plan properties.
Off-plan properties are properties that have not yet been fully built. Usually, you can buy these houses for shallow deposits and for cheaper than their market price, which allows you to have an opportunity for much higher profits when renting or selling the house.
London is seen worldwide as a ‘safe haven’ for property investment because London house prices are nearly always rising! In the next 5 years, prices in London are forecasted to increase by 10.4%.
This may not be an admirable thing for first-time buyers or people looking for new homes. Still, it is excellent news for property investing. Property investors can buy houses and rent them out for 5 years and then sell them for an average of 10.4% profit. This profit plus all the money from rent payment over 5 years is a lot of money in total.