How to invest in real estate

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Today, more and more people are becoming wise to the fact that money in a savings account means wasted potential. The way to make money is to invest, so why not start with something that most people at that stage in life already have experience assessing and haggling over? Well-chosen property is one of the most secure forms of investment possible. If it’s well managed, it can also be quite lucrative. So, what does the new investor need to know?

How does property investment work?

The first step in property investment involves getting smart about what to buy and how to buy it. Different property types are in demand in different areas, and what renters want may not correspond to what owner-occupiers want. By buying property that requires renovation – often easier to do at auction than through conventional estate agencies – it’s possible to get away with paying considerably less, even after the cost of materials and time for repairs is taken into account. Owning and letting a single property generally doesn’t generate much of a profit, so investors usually remortgage at an early stage in order to buy more. It usually takes three or four properties to start making a decent income from investing like this.

What skills and knowledge are required?

As well as understanding the specific markets in which they’re buying, real estate investors need to be well informed about the issues involved in restoration and able to correctly interpret a surveyor’s report. They need to have good contacts among specialists, such as carpenters and plumbers, and sufficient understanding of these issues themselves to be able to direct work effectively and know when quotes are fair. It’s possible to bring in a letting agency to manage the rental of a property, but doing so will significantly reduce profits, so it helps to be in a position to advertise and supervise directly. This requires familiarity with relevant legislation.

Investing internationally

Ambitious investors looking for the hottest property deals may not wish to limit themselves to the UK. Locations like Tuscany, Istanbul and North Eastern Brazil are ripe with opportunity just now, with rental interest far higher than the amount of good quality accommodation available. Investing overseas can be a challenge because it requires building a fresh contacts network in the relevant area and, potentially, overcoming language barriers, but some people manage to make a big success of it. Fahad Al Rajaan started out by investing in properties in his native Kuwait but has since expanded across several countries, including the UK. By spending time getting to know the cultural character of each location, he has been able to anticipate trends and invest successfully in properties whose value is set to increase above the general market rate.

Most people still choose to focus on investing in the areas where they live, but it’s also worth looking at other areas across the UK. These are, after all, easy to travel to, and places like Manchester and Birmingham offer fantastic opportunity at present. Well-informed investors can be very successful by broadening their perspectives and going where the money can be made.

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