Property Investment Frequently Asked Questions

Download

Property Investment FAQs
Below are the top questions we've been asked about property investment - so we thought it would be helpful to publish them! Don't forget you can email us on enquiries@designsonproperty.co.uk or call us on 0845 838 1763 if you need support before, during or after your property investment.

How much money do I need to invest in property?
This depends on what type of property investment you are considering. You can invest in property via funds for a few thousand pounds through to £300,000 or more for a property investment franchise.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as independent property investment consultancy!

What returns can I get by investing in property?
Property investment returns vary depending on the type of property investment and typically the time that you invest for. For example you can invest in Buy to Let (see FAQs below) with around £20-£30k and receive a gross annual return on your investment of 4-7% and average capital growth over a ten year period of around 5%. However if you are buying land and building from scratch, depending on market conditions you may be about to gain a 100% return on your investment within 18 months - however this kind of return requires expert knowledge.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when working with property investment companies!

What is the fastest way of getting a return on property investment?
The quickest way of making money from property is actually one of the hardest. It's buying a property you know is at a discount, then immediately selling on at a profit. Not too difficult in a rising market but requires professional experience in a static/falling market. Other fast ways of making money are from self build or property development which can be turned around in less than 12 months.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as self build finance and project management!

Do 'no money down deals' property investment deals work?
They can, but are extremely high risk. You are effectively 'betting' that the property market will rise. We have seen in 2008 that doesn't always work. No money down deals should only be entered into if you are confident in the people that are offering them, they allow you to check their information with your own independent legal and financial advisor. Never enter a 'no money down' deal unless you have excess cash to cover losses.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when working with property investment companies!

What are the risks investing in property?
The risks are great. Versus other financial investments, property is a medium to high risk investment. The difference between property and other financial investments is if it goes wrong it can go very wrong - as we have seen in 2008. Unlike stocks/shares/pensions if your property investment falls in value or you aren't able to cover the costs of holding your property investment you have to find MORE money to put in, if you don't you could lose everything and potentially go bankrupt.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when seeking independent financial advice!

What are the benefits of property investment?
The main benefit that investors see is the opportunity to 'gear' the investment through borrowing money, so if you have £50,000 to invest and gain a 10% return, you'll receive £5,000 gross profit. If you invest £50,000 in a property worth £200,000 and it grows by 10%, you'll get £20,000 back. However this only works when property prices are rising, you buy at a substantial (real) discount and/or you wait until the property has grown in value.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property investment consultancy!

Can property investment deals help me get rich quick?
It's unlikely. 2000 to 2005/6 were unprecedented years in property price growth, and it was only really during this time you make money within months or a year. You can invest in 'flipping' property, building property from scratch or renovating property and adding value. This can give you a 'quick' profit within a year. However with the uncertainty around property prices, this increasingly requires professional help which can eat into any profits.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as sessions with property investment professionals!

Is investing in property better than investing in the stock market?
This depends on your attitude to investment risk and how much money you have available to invest. You should seek advice from an Independent Financial Advisor to help you identify the answer to this question. DO NOT RELY on any other companies/people to answer this for you they will have their own agenda!

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as independent financial advice!

Is investing in property better than investing in a pension?
Property investment as a pension scheme isn't necessarily the best way to invest your money, mainly because you will lose the tax benefits of investing through a pension scheme which if you are a 40% tax payer can be quite substantial. Check with an Independent Financial Advisor and also with your company pension scheme if you are looking to invest in property versus a pension scheme.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when researching and organising property investment via SIPPs!

What are the pros of investing in property?
The pros of investing in property is that your choice of what you invest in are typically yours. You can also "touch and feel" your investment, giving you the feeling of more 'control'. If done well, property investment can deliver some great returns. However property investment isn't easy and increasingly requires professional assistance from people/companies that have been investing successfully since the early 1990s.
Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when organising services such as professional property investment!

What are the cons of investing in property?
The downsides of property investment is having to 'top up' your investments with cash if they don't perform and that you are to some extent at the mercy of macro and micro economic conditions. Finally property investment is complex and not every property, fund, syndicate will deliver. The research required can take weeks and months and the amount of money now required in the UK to invest is in excess of £30k for just one property. Property investment from 2008 really requires professional expertise, rather than just anyone investing in any property or area.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as subscribing to auction websites!

How much does a buy to let cost?
You would normally need a 25% deposit on the property's value, around £2-3k to make sure the property is legal and fit to let and an on-going investment of £500-£1,000 per year to maintain the property/let. You also need to consider your buying/selling costs, which range from 2-3% to 8-9%.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as independent buy to let consultancy services!

What return will I get from buy to let?
Buy to let gives two types of return typically over a 10-15 year period. Income from rent which can be 4-12% of your investment and growth from capital which is purely an estimate from historic price information of around 5% per annum OVER A TEN+ YEAR PERIOD.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as buy to let property tax!

How much does investing in property funds cost?
Property funds range from a few thousand pounds to tens of thousands of pounds, it depends on the minimum investment requirement of the fund. Consult an Independent Financial Advisor to research property funds for you.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as independent financial advice!
 
What return will I get from property funds?
Property fund returns vary depending on how successful the fund manager is - much like stock and share fund investments. Consult an Independent Financial Advisor for returns from specific property funds.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as independent financial advice!

How much does it cost to invest in off plan?
Investing off plan typically only works as an investment in a rising market, so be careful what you buy and how far ahead you purchase property. Costs can vary, but you typically have to pay a 10-20% deposit at exchange and legal/finance fees. You can however look to a service called "The Exchange Bond" which is an insurance policy you pay, costing around £1,000 which means you don't have to pay the deposit at all. However you will still need to go ahead and purchase the property when it's completed.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property valuation services!

What return will I get from investing in off plan properties?
Off plan only works when a market is rising. You can easily lose money as property price markets typically turn within three month periods, while off plan purchases are made years ahead. If the market increases you can see returns of 10% or more, depending on what discount you received and market conditions. However you should aim for a hefty discount based on an independent survey for both value and rental potential. Don't rely on builder's surveyor reports or property investment company information.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as new build snagging services!

How much does it cost to invest in commercial property?
Commercial costs are similar to buy to let, but be aware that funding for commercial property below £300k is harder to secure than residential during an economic downturn. Deposits are usually at least 25% if not more. Costs of buying are higher than residential, around 3-5% and 10-15% for larger properties over £250,000. The main advantage of commercial versus residential is that tenancy contracts can be longer and you typically have more flexibility with regards to adapting the size of the accommodation and who you rent to.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as commercial finance!

What return will I get from investing in commercial property?
Commercial property is typically a long term investment of ten+ years. You typically receive 4% rental income with localised capital growth. However some commercial properties may be better to purchase and make money from IF you can gain a change of use to residential. Always use a local, independent qualified surveyor to help you analyse the pros/cons of specific commmercial investments.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as commercial surveying!

How much does it cost to invest in property renovation?
Property renovation costs vary dramatically depending on the project. However for investment purposes you will need to purchase the property, which will typically cost from £25k upwards. In addition you have your buying costs; renovation costs; cost of 'holding' the property (a mortgage for example) and selling the property. So a £150k development might cost from £50k to buy/renovate and sell at a profit. 

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as auction subscription services!

What return will I get from investing property renovation?
If you get property renovation right and property prices DON'T fall, you should aim for a gross return of 20%.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property valuation services!

How much does it cost to invest in property development?
Property development is a big upfront cost, but if you sell quickly can reap major rewards. The costs are buying the land; securing finance and planning; materials; builder/contractors and marketing/sales costs. Building plots vary from around £100,000 to millions pounds depending on how big they are and where they are. Build costs tend to be from 50-£60k per property with legal, finance, selling/marketing fees around 10-15% of the purchase costs.   

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property development finance!

What return will I get from investing in property development?
Property development returns can be 50-100% depending on whether you develop the land to suit those that want/can buy versus properties that 'in theory' make the most profit, on paper!

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property and land surveys!

How much does it cost to invest in land?
Land investments can cost from a few hundred pounds to millions, depending on where the land is and more importantly what it's designated use is. Land is typically more complicated to invest in than buildings as uses vary from a building plot (most expensive land) to a woodland. Land is also not an investment that can just be 'left'. Woods have to managed legally, rarely can you just 'chop down a tree' when you feel like it! Change of use of non-building land to land with planning permission to build is rare. Beware of schemes that offer 'plots of land for sale' that they intend to gain planning permission on in the future. This is a high risk investment and only worth it if you never expect to see the money again!

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as land agents!

What return will I get from investing in land?
Land investments vary so much that it's quite difficult to give an estimate. Land prices typically follow property prices, but can sometimes perform better if demand particularly for farmland is on the rise. One of the key benefits of investing in land is that there are some inheritance tax benefits, so if you want to pass your investment onto your children it may be tax efficient to buy land. Seek professional advice and NEVER buy land without professional, independent help or a land survey.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as land surveys!

How much does it cost to invest in property overseas?
The main cost consideration when investing in property overseas is actually exchange rate fluctuations as an adverse move can lose you lots of money and a positive change can make you lots of money overnight! Overseas properties can be cheaper to invest in than buying in the UK, so it is possible to invest with around £10,000. However your legal and finance bills will be higher and if you are securing the property with a mortgage, you will also have to decide whether to pay in the foreign currency or in pounds sterling. Note that overseas properties are often priced higher for British buyers than the locals - so if you are investing, make sure you pay the same as a local would!

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as buying overseas agents!

What return will I get from investing overseas?
Overseas property investment returns depend on the success of the country's economy and the restriction of supply versus demand. While the UK is suffering a downturn it is likely you could make greater gains abroad, but you MUST make sure you spend weeks/months researching your purchase and don't buy unless you have a clear exit plan.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheet and ebooks for free. We will even save you £££s money when booking services such as overseas property surveys!

Where can I find property at Below Market Value (BMV)?
Buying below market value (BMV) is a 'buzz word' that has come from property investment companies. There is often much 'mystery' applied to how to buy at BMV and you can pay thousands of pounds for the 'secret ways of accessing' properties at BMV. The truth is it isn't easy and you have to put lots of time aside, make lots of offers, most of which will get rejected! The key to buying properties at below market value is to understand local property prices well enough that you almost instantly know when a property is for sale at below market value. 

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property valuation services!

How much should I be buying a property Below Market Value?
In a recession you would look to be buying property at least 15% below their true market value at the time of purchase to avoid problems from future price falls and ideally 20% or more. However to buy at this level of discount you would need to be comfortable with buying off people who are about to be reposessed or are in severe financial difficulties.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property surveys!

Can I lose money investing in property?
Yes you can and lots of it! As people typically buy property while borrowing, although your returns can be great as prices go up, they can be spectacularly bad as prices fall, causing some people to go bankrupt and lose their own home.

Need to find out more? Try our Property Investment Store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as property valuation services!

Free Property Articles

  Making Money from Property and Buy to Let
  Future Market: What Impact will another Recession have on the Property Market?
  Past Market Performance: Property Prices Start to Freeze
  Investment and Property
  Demand Down to Rent a Commercial Property
 
NALS Conference Chair 2016

Kate's Consumer Portal

Propertychecklists.co.uk

FREE Buy to Let eBooks

Download a copy of our
Buy to Let Show eBooks
for FREEsimply click on
the image below

Buy to Let Show - download our Buy to Let eBook for FREE