When it comes to investing, using a property investment strategy is essential to success. However, strategies depend on the investor’s objectives and can vary greatly. Here are our top five tried and tested strategies:
Exit – the most important part of the strategy
When investing, the first thing you should do is devise an exit strategy – a well thought-out plan, clearly focusing on how and when you’re going to sell your investment and make a profit and whether or not you are going to buy another. It’s crucial that you decide before you make your initial offer and seek professional advice on property investment. Be aware of the economy, interest rates and job situation in the area. They can all affect the total profit once you sell up. It’s also worth considering what you’ll do if property values begin to fall or if it takes a long time to find a buyer.
This strategy is widely recommended when seeking property investment advice. It is the process of buying a property with the aim of renting it out to make capital gains as well as income returns. Typically, an investor will hold on to the property for a period of 2 to 5 years before selling. In the meantime, it can be rented as a holiday let or long-term rental in order to generate income. However, if you choose to use this strategy, a good property investment guide is to be clear about whether immediate income generation or capital appreciation is your main objective.
This short-term strategy enables fast cash and can be used to buy a property then quickly sell it on before the title is transferred into your name. The average duration for this type of investment property strategy is usually between 18 and 24 months and involves the purchase of an off-plan unit (property that either hasn’t yet been built or is about to) and can lead to excellent capital appreciation. Emerging markets where prices remain low are typically the most successful.
Another strategy for investing in property is to buy an inexpensive house and make major improvements to boost its price and leave you with a decent profit when it comes to selling up in the future. This is a popular option for first-time buyers who don’t have enough funds to wait for returns on the investment.
This investment property strategy entails buying a property at below market value, then selling it at market price using vendor financing but keeping the existing mortgage. This allows the investor to receive small regular payments as opposed to one lump sum settlement payout. This can be particularly beneficial to investors with little or no deposit funds/have difficulty qualifying for conventional finance. The investor makes a margin on the sale price and interest rate.