As with every risk, a wise person evaluates it in terms of likelihood and effect and either takes the risk or avoids it depending on the result of their evaluation.

In investment circles this is termed as "due diligence". The real risks need to be investigated, evaluated and, if necessary whenever possible mitigated. Unfortunately, the situation can often be clouded by excessive concern over perceived risks at the expense of concentrating on conducting effective due diligence. so if you are not familiar with this process, we strongly advise you seek advice.

What are the real risks?

Security - How safe is the investment?

Before any investment opportunity is considered, it must have undergone extensive scrutiny due diligence.

Try to ensure the property has been developed by top class names in the property market, both at home and abroad, take it further and check that the discounts are genuine and that rental yields quoted are realistic and verified by local letting agents.

"This is where many fall at the first hurdle !"

Mind set - Home v investment

Looking at investment property decisions in the same light as your home can lead to some potentially disastrous mistakes. The things we take into consideration when buying our home are not the same as the practical financial calculations we use to assess investment property.

"Never personalise an investment !"

Sound property investment decisions ALWAYS come from the head and not the heart.

Property - Prices may fall

As shown earlier, the worst the market got was in 1992 when the property prices saw less than a 4% reduction in one year and the average was still able to double every 8.2 years in the long term. If you are seeking long term investments, short term market fluctuations can be absorbed.

Therefore, property investment is a medium to long term process and should always be looked at that way.

Long term housing market growth is steady and reliable and can always absorb short term fluctuations.

Demand - Will it continue to outstrip supply?

It is easy to feel that the past will not be repeated in the future and that what has been profitable for others will somehow change because we have decided to try it. It is essential therefore to look at statistical evidence to confirm future housing needs. In order to view the decision to enter the property investment market in a rational context, we draw your attention to the UK market specifically, where information from the Office of the Deputy Prime Minister and the building industry revealed that:

ODPM says that we need 2,000,000 new homes over the next 5 years. That is a demand for 400,000 new houses every year, but we only build around 200,000 new properties per year.

We cannot keep up with the demand for housing!

Rental voids - What if I can't get a tenant

Many new landlords wonder if there will be enough tenants out there to rent their property. The Office of the Deputy Prime Minister tells us that :

"About one in 10 households in England rent their accommodation from a private landlord, this accounts for about 2 million households."

You will not run out of tenants!

"Always make sure the property agent you select is an I.B.A. member"

International Business Association
Copyright | Website Terms of Use | Privacy Policy | Email Policy | Spam Policy | Data Protection | Disclaimer