How property investment can work for you: part 3
In general, people view investing in property as a way to gaining financial security for their future. For many investors, they manage their investment properties alongside their regular full-time job, providing an extra source of income.
However, full-time property investment is big business. Experienced investors know the pitfalls of doing it full time and can manage it well, but for novice investors this could be a massive gamble.
Giving up work to become a full-time property investor is a big commitment. Whilst it may free up your time to concentrate on your investments, you’ll need a regular cash flow to support you.
There are two main ways of running your investments as a business; by becoming a professional residential landlord or becoming a property developer.
Becoming a landlord
Serious investors with multiple properties often become professional landlords. This in itself is a challenge but it has the potential to be very profitable.
The main benefit is you can achieve good rental rates because the cost of renting a property is now higher than ever before. The Association of Residential Letting Agents has recently reported that rent levels have increased in all UK areas so far in 2007.
However, being a landlord of residential property means you have certain responsibilities to undertake to ensure the property is up to rentable standard. This includes maintenance, so if you’re not a handy DIYer you’ll need to factor in the costs of tradesmen.
Becoming a property developer
Buying property to ‘do up’ has proved very popular over the last decade or so. This boom is mainly due to media coverage, the number of TV programmes highlighting the potential profits to be made in property is astonishing.
Fuelled by the inspiration of other success stories, the market has been flooded with wannabe developers, which has and continues to have a knock-on affect on the housing market. High demand for previously undesirable properties naturally increases prices so there’s actually less of a bargain to be had than pre-boom times.
Buying property to develop and sell on for profit is a very ‘hands-on approach’. A constant cash flow to pay for materials and labour is essential, not to mention the need for good project and time management skills.
Over the past three weeks we’ve covered everything there is to know about how property investment can work for you. We’ve talked you through the reasons why people choose property, the process of starting your portfolio and the options of how to do it full time.
The main thing to remember is property investment is not a get rich quick scheme and there are no guarantees, but the historical evidence proves property is one of the best investments you can ever make.
Anne Kelly is the editor of Equity Property Portfolios. For more information please contact Equity Property Portfolios by visiting https://www.dentistry.co.uk/equityform/