A Beginners Guide to Property Investment

April 8, 2008 by

real estate handsProperty investment has greatly increased in popularity over recent years. Lenders offering tailored mortgage products have helped feed this ever-growing industry. Many individuals, groups and companies are now being advised to invest in UK and Overseas property as an alternative to using conventional pension funds. Amazing returns on investment have been realized. Rather than making a profit on the capital you invest, the use of mortgages allows profits to be made on the full property value with comparably minimal capital outlay.

It is plain to see how just one of the above factors would be sufficient to stir great interest in property investment.

No matter what your reason is for choosing property investment, there are several crucial factors to consider before searching for the right property.

There are many methods which can be applied to property investment, dependent on your goals and what you want to achieve. Without going into further depth and variation, this can be broken down into two general aims:

  1. Buy to Sell – Buying and selling investment property within the short term for profit.
  2. Buy to Let – Buying and letting to achieve a rental income and accumulate equity, normally over the mid to long term.

It is important to decide which route to go down, as this will very much depend on the property most suitable to invest in and how best to set this up.

Property investment can be extremely rewarding but should only be entered into with due care and consideration. There are many crucial factors to consider which will determine which direction you will move in when considering the endless property investment possibilities.

Careful consideration must be given to location. You must decide if you wish to invest in your local area which you may be more familiar with, or invest in a current “hot spot” which may provide more attractive investment options.

The more adventurous investor may be interested in overseas property investment. A great deal of care and research should be given to any investment property proposition, particularly when looking overseas where the purchase process, tax liabilities, etc. could be very different to the UK.

Property price must also be considered, with widely varying properties available at all levels of investment. Investors tend to be guided by the capital they wish to invest in any one property.

A mortgage broker or lender will be able to advise you on how much you can borrow to invest in property, along with any further costs or fees involved. A Solicitor can also advise you on the legal costs, disbursements (local search fees, etc.) and stamp duty cost if applicable.

Once these factors have been considered, the next step in property investment would be to search for suitable properties and undertake the essential research to minimize risk and maximize profit.

You can never do too much research. Speak to local agents to get feedback from the perspective of property professionals.

Properties which are ideal for investment will inevitably sell quickly. Time consuming research can unfortunately result in astute investors missing out on some great investment opportunities. The internet can be a great place to carry out a large portion of the required research in a fraction of the time.

The above serves well as an introduction to property investment and the first steps which should be undertaken. By gaining a good perspective of your goals and aims and by not deviating from your chosen investment plan, you should form a solid basis for successful property investment.

This guest post was written by Dan Chamberlain. If you have any questions or responses to this article, please post a comment below.

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44 Responses to “A Beginners Guide to Property Investment”

  1. Terry on April 10th, 2008 8:01 am

    I would recommend that a beginning investor first learn everything he can about the pros and cons of real estate investing. There are a number of very good books, websites and blogs out there. The uninformed investor that just goes out and buys something relying solely on a broker is most likely going to be disappointed in their actual results. Every successful investor has made mistakes. There is no reason a beginner should repeat most of them with the information now available to beginners.

  2. amit on April 21st, 2008 2:02 am

    thanks for this valuable article it would be very good for those people who want to make their carrier in real estate or going for buy or sell a property.

  3. Murfreesboro Townhomes on August 26th, 2008 7:09 am

    I was thinking about getting my real estate license do you have any pointers for me as to where to begin?

  4. Buy My House on September 3rd, 2008 11:59 pm

    Great article. I totally agree with Terry – for the newbie investor it is essential to read everything, and learn all you can about property investing before putting a toe in the water. Also I think buy to sell would be tricky to pull off at present, given the state of the UK housing market – so anyone new to the property game would be better off starting with a few buy to lets.

  5. keralalistings on September 13th, 2008 7:15 am

    Property investment for beginners is a difficult topic since experience is precisely what is required for a successful property investment. Property investment requires skill and experience in the local market. So investment should be done only after studying the market closely. Also only invest in ventures which are considered safe. Good real estate consultancies which are specialized in that given area shall be approached. In this regard special attention should be taken to approach consultancies which can provide a unbiased property consultation. So it will be better to rely on consultancies which can provide larger number of choices.

    Aby Paul
    Kerala real estate

  6. Seanster on October 2nd, 2008 5:16 am

    Knowledge is POWER.Learn everything about real estate investing , you can visit blogs,article sites which are related to real estate investing. Starting with real estate investment business these days are not as difficult as the starting real estate business 2 centuries ago. Web 2.0 is helping newbies learn tactics and techniques about real estate investment.Great POst.

  7. Augie on October 24th, 2008 10:56 am

    Definitely learn as much as you can before you invest. I would suggest also learning about alternative financing options. In our current market, the banks have made it much harder for buyers to obtain a traditional loan. There are several real estate financing techniques that can be used to make this a bit easier including, Seller Financing, Lease Options and Wrap-around mortgages.

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  9. Leon Alchalel on November 17th, 2008 10:45 am

    It is very important to evaluate your risks. As we all know, high risk means a higher return. But risks may vary depending on the person making the investment. you have to know that as an investor, there are ways to reduce your risks so that a higher risk for soemone else is a lowers risk for you. When buying a property you have to think about how your own knowledge and experience reduces your risks. For example: you might be a handyman and know a lot about construction so for you it is less risky to buy a property that needs to be repaired since you can probably fix it in a cheaper way than if you didn’t have this knowledge. Another exaple is if you have a network of people that you know are looking to rent something in specific, you can buy a property that is not rented, rent it out and sell it right away for a profit, because a rented property is more expensive than a vacant one.
    These are just two fast examples, the point that I’m trying to make is that you really need to evaluate your risks and think how you might be able to reduce them according to your knowledge and experience.

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  11. Shane Osullivan on November 20th, 2008 7:23 pm

    This is a good article, and it does bring up some good points for the beginner investor. But one of the most importation about investing is that you need to do flips and holds, that way you are covered no matter what the market is doing.

  12. Jorene on November 21st, 2008 3:24 pm

    Very good article. I am a new real estate investor and I’ve learned that in order to succeed in this business a new REI should find out and learn everything first before plunging deep in the real estate world.

  13. rumah murah on December 18th, 2008 3:23 pm

    Safety is the first point to take into account in any investments. Considering of safety, I’d rather like to invest on property in my homeland. My city, Surabaya and surrounding region, Sidoarjo, Gresik and other city in East Java, of course, I recognize them well. The market, community, economic level, regulation, building material type and prices, any resources and other risks. Do you know the most prospective property in my town ? Cheap house, simple house, small house called “rumah murah”, “rumah sederhana”

  14. real estate management on March 17th, 2009 10:55 pm

    I agree with your views that property investment is increasing day by day.

  15. terrance willenborg on March 27th, 2009 1:57 pm

    I also agree with terry but does any one have more information on this I have study most all the books and have done a few courses not going to say the names but I am stuck I am a mantanance superviser at a 140 unit complex this is my 4th complex I can do about any thing from manger to turning the apartment to taken care of bills and the vendors but and have been doing it for 9 years now and its time for me to buy my own building so what I am looking for I am i to know every thing about the apartment biz even the way the loan app works it a lot to taken in I know how to do the noi,cap rates,etc but trying to read every thing its hard but I am also looking for partners in the killeen taxas area so any help thrown my way would be very greatful.

    thanks

  16. Blake Wyatt on August 1st, 2009 9:34 pm

    Great article that should point beginner investors in the right direction. The best tip I can offer is find a mentor who’s success you want to model.

  17. Staten Island Real Estate Agent on August 17th, 2009 6:14 am

    Great read! When getting into property investing you should always read and research, before jumping in. If you just jump in you could lose alot of money. Knowing different key topics can save you and send you on the right course.

  18. Alara Cockburn on August 25th, 2009 3:41 am

    Good article. Nice information is given. the post seems to be very interesting one. To know more details about investing in real estate business please click the name link. They will teach the tricks and secrets of the real estate investors.

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  20. Cherrie Diaz on September 15th, 2009 9:47 am

    I would recommend for a beginner to first learn everything that you can about the pros and cons of real estate investing. There are a number of very good books, websites and blogs out there. And i would recommend you to read the Bank Owned Investor Insider’s Guide and you’ll learn the secrets in buying bank owned properties.

  21. austin condos on September 21st, 2009 9:25 pm

    Investing in real estate involves being among the first to spot wholesale properties that are bargains and being able to recognize those bargains. Once you can do this, you can still make money in the residential real estate market

  22. terrance willenborg on September 23rd, 2009 1:49 pm

    quick question what are you talking about with the web 2.0 is that a program? any help will be very helpful.

    Thanks

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  24. GreenVille on October 9th, 2009 9:46 am

    It important to have knowledge in real estate. For beginners you should learn the pros and cons in investing property.

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  26. Keisha on March 30th, 2010 5:06 pm

    Starting a commercial property investment is really hard. There’s a lot of stuff to consider. Good thing there’s article like yours that could help people start in investing.

  27. Real Estate Expert on July 26th, 2010 9:29 pm

    In my opinion real estate books can only do soo much, it is important to find a way to connect with other real estate professionals being that you can get one on one advice.

  28. Real Estate Expert on July 26th, 2010 9:30 pm

    I would recommend investing in the worlds emerging economies.

  29. William Tingle Real Estate on November 23rd, 2010 6:37 am

    Dan, I completely agree with this statement “You can never do too much research.”, only by doing the legwork can one achieve success. Delving into property investment can be very rewarding for those who make informed decisions.

  30. Tyler on November 23rd, 2010 5:36 pm

    Good Advice. It’s time to go back to basics and fundamentals of old school investing. The secret is “cash-flow”…, getting paid to wait while you investment matures.

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  36. Mario Acosta on June 8th, 2011 6:27 pm

    Tyler–Couldn’t agree more. Cash flow is king. The rent v. buy equation is getting better. Cash flow is a great insurance policy if the market continues down a bit more.

  37. Mario Acosta on June 8th, 2011 6:28 pm

    Tyler–Couldn’t agree more. Cash flow is king. The rent v. buy equation is getting better. Cash flow is a great insurance protection if the market continues down a bit more.

  38. Apartments Review on August 23rd, 2011 1:14 am

    Good share and I agree with you, people should also check out the market before investing in property. Do not totally depends on broker and agents increase your own contact with buyers and sellers. And remember one think property investment can gives you targeted benefit but for that you have to keep patience after purchasing any property.

  39. Buy Residential Property on August 24th, 2011 4:39 am

    This is indeed Good Post. Property investment often seems complex to the inexperienced investor. I am sure that It’ll be useful for them who want to invest in Real Estate Property!

  40. Niklas Hahn on November 6th, 2011 10:55 am

    true! real estate business can be difficult for newbies as experience is really a necessary tool for you to be successful. guidance from the experts and having the right tools are helpful to begin one’s endeavors in property investment.

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  43. Custodian Wealth Builders on August 28th, 2012 12:50 am

    I am completely convinced that property investment is a good deal. In property investment we will be able to maximize the highest financial gain from our investment property.

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