When purchasing an investment property, all aspects should be looked at carefully. We have provided three tips that we believe to be useful.
Returns – The first factor is the most obvious: What are the returns on offer? The returns you will receive are based on how well the property performs, so a useful guide is to see where the properties are based and how well rental yields perform in that area.
Yield v Capital Growth – People invest for different reasons and many are happy to only achieve a low yield as they are confident in the prospects for capital growth.
However, profits from capital growth are speculative and if you want to minimise your risk, you should invest in those properties which produce a healthy cash flow. If the property is putting money in your pocket every year, then you will not be under pressure to sell and can wait for the optimum time to liquidate and benefit from the capital appreciation.
The biggest risk associated with investing in cash flow positive properties is damage and/or non-payment of rent. This does need to be factored in as it will happen at some point and yields will be affected.
Security and Risk – How will your investment be protected? If it goes wrong, how much equity is there to enable you to recover your money?
Buy to let with no mortgage = lower risk/decent return
Buy to let with a mortgage = higher risk/potentially higher returns
Development finance = higher risk / potentially much higher & shorter term returns
If you are thinking of investing in Property or require more information on Investment & Yields call us on 0151 231 1613 or email liverpool.sales@belvoir.co.uk
