Property's not for the get-rich-quick

publication date: Mar 15, 2011
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Property's not for the get-rich-quick


Should you be investing in Bricks and Mortar?


With interest rates remaining low and many people’s savings being eroded by current high inflation levels, property investment ‘entrepreneurs’ are keen to sell you the idea of investing in property to protect your future income, or even to achieve ‘financial freedom’.

Although property can be a good way to secure a return on money you have to invest, it’s by no means necessarily the right thing for you to do. The truth is that investing in property is not a ‘get rich quick’ scheme as many property investment companies would like you to believe. In fact, some unscrupulous companies will do almost anything to secure your money.

For example, ‘land banking’ companies are keen to offer you small plots of land that they claim will give you huge returns on your investment monies as the investment company will secure planning, sell onto a developer and they then claim it would be worth a fortune. Radio 4’s Money Box recently featured someone who had invested over £100,000 on land which turned out to be almost worthless as there was no planning permission, nor was it ever likely to be given!

Other investment companies claim they will source properties for you ‘at below market value’. For example, the property is claimed to be worth £100,000 but for a £5,000 fee you can buy it for £70,000, saving 30% and gaining instant equity. As with buying land without planning permission, properties being sold for ‘below market value’ are very few and far between in this current market. You should also wonder why companies are offering you the opportunity of gaining a property at £70,000 that is really worth £100,000 for a £5,000 fee, when they could earn the money on the property themselves!

Anyone that is considering investing in property should make sure that they do so with independent advice. Companies that make money from selling you property are about the last people to go to!

Before you decide to invest in property, it’s important to assess your financial situation first. In today’s world this is a complicated matter and not one that you should try to assess yourself. You need to think about the money you have available to invest and the time that you are happy to ‘lock this money away’ in a property. It is also important to understand your investment objectives, what returns you are looking for and when you are looking to cash in your investment.

To do this, it’s vital to seek help from an Independent Financial Advisor before you do anything. If you do decide property investment is right for you, they should also be able to help with specialist mortgages and insurance as well as point you in the right direction for additional legal and property tax advice you will require.

So remember, property investment could be right for you, but it doesn’t always give the ‘great’ returns that property investment companies try to sell you. Before you make any decision to invest your money in property, make sure you seek independent advice and appreciate that property can make you money, but typically over a long time period.  

(Article first published in the Nottingham Evening Post)

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