Finding The Perfect Investment Property
One of the best ways to make money, long-term, is to invest in property. However, the challenge is that you could find the most wonderful investment property but if you don’t have the finances in place to make it happen – your property dream will never materialise.
In terms of finance, whilst the credit crunch has made it much more challenging for many people to obtain credit, the concept of a mortgage offers a great deal of security to the financial institution, as it is secured on the house itself. That said, getting a mortgage is not always easy, particularly if you have adverse credit history or don’t fit the ideal criteria (e.g. being self-employed rather than in a secure job for the past few years).
Therefore, something of particular interest to property investors is the concept of bridging loans which offer an emergency short-term solution providing immediate cash flow to finalise the purchase of a property.
This type of finance is harder to obtain in Scotland than in England, as property laws are different – but you should still be able to find this type of short-term finance anywhere in the UK, and auction houses often have representatives standing by to quite literally bridge the gap in your finances to enable the purchase of a particular property.
However, before you get lost down the rabbit hole of property finance, you’ll need to find the ideal investment property, and there are essentially three ways to do that:
- FIND AN ESTATE AGENT
The most conventional way to find a property is to use an estate agent which can provide value in terms of the return on investment, particularly due to the convenience and possibility to have an invested (yet somewhat neutral) third party to mediate between the buyer and seller in order to assess where things such as ‘lowest offer’ really stand. A solid real estate is well worth the commission, however, more and more people are starting to buy and sell their homes without using a real estate agent; using property websites that connect private sellers with private buyers.
- PROPERTY AUCTIONS
Many amateur property investors choose to head to a property auction, as they’ve heard this will be the best place to grab a deal. There are some great deals to be found at property auctions, however, there’s often a reason the property is being sold at auction; which is why it’s important to do plenty of research into understanding why the house is being sold at auction.
It could be as simple as a financial issue where the bank has foreclosed on the house and their corporate policy is to always sell at auction, or perhaps a relative has inherited the property and wishes to sell it from a distance – but sometimes sellers are choosing an auction for more dubious reasons, just like how car dealers will sometimes sell a car with hidden issues at auction.
- GO DIRECT
A better option than going to auction, particularly for newbie property developers, might be to find sellers and negotiate with them one-to-one without any middleman taking a cut; be this an auction house or an estate agent. This level of negotiation can often be trickier than outsourcing the task to a real estate agent, who is more neutral and mindful to the very personal nature of someone selling their home – but presuming you have tactful negotiation skills, finding homeowners wishing to sell their property is made particularly easy with the explosion of the internet.
While direct negotiation offers advantages, it also introduces specific challenges, particularly when dealing with differing expectations or hidden issues that might surface during due diligence. Such direct transactions rely heavily on clear communication and mutual understanding to prevent future disagreements.
Ensuring all agreements are precisely documented and legally sound becomes paramount, especially if unforeseen issues arise post-sale. Navigating these complexities, which might involve clarifying boundaries or resolving encumbrance claims, often requires understanding of property disputes to safeguard both parties and the investment itself.
Once you have found your ideal property and sorted out the finance – the next thing is to work out what to do, whether you’re going to quickly do it up and sell it on for a profit, or rent it out and become property landlords.
Whatever you decide to do, remember that property investing doesn’t tend to offer a quick buck in the short-term but it can be an incredibly lucrative and sustainable long-term investment strategy.
