Much like other long-term commitments, such as getting married or taking a new job, it is important to make sure that you are making the right decision. Among other factors, this can come down to whether a particular form of investment suits your personality.
Those who like risky ventures should look at emerging markets such as Eastern Europe, while for amateur investors looking for a more guaranteed investment, a more reliable option is student lets. Similarly, those who want a ‘let-and-forget’ property should pick hands-off options like holiday rentals using a management company.
Gambler: You don’t mind being first out of the blocks to try something new, hoping that you might make a fortune out of it at some point in the future.
Ideal buy-to-let: Eastern Europe apartment
Characteristics: Since joining the EU in May, the former Eastern block countries are now opening up to the West. Quick off the mark are Hungary and Slovakia. Bulgaria, set to join in 2007, is already seeing the investors move in. Corporate lets are the favoured option in the capitals, but holiday lets could become an option if the budget airlines bring in the city weekenders.
First-timer: You want to get involved in property investment and have a bit of time and cash to spare. You don’t mind getting involved in looking after the property but you want to see some income straight away
Ideal buy-to-let: Student house
Characteristics: Student houses require a good location and lots of bedrooms and that’s about it. They can be cheaply decorated and furnished and you should see returns as soon as the term starts. Void periods run annually during the summer holidays but with on average four full-paying tenants for the rest of the year you should be able to afford this time out.
Flash Harry: With some spare capital behind you, you are looking for an easy alternative to the pension fund as well as something you can enjoy the benefits of now
Ideal buy-to-let: Spanish villa
Characteristics: A Spanish villa on the edge of a golf course could provide you with a sunshine retreat as well as rental income from tourists. A decent villa in a good location in the established areas will cost close to UK prices but the infrastructure is in place meaning that the golfers are likely to be attracted to the year-round sunshine. However, you will need to employ some local staff to maintain the gardens and pool as well as clean the interior of the property on a weekly basis.
Wheeler-Dealer: You don’t mind a bit of risk but like to be involved with your investment and know what’s going on. You are willing to put quite a lot of money into a project that will provide returns
Ideal buy-to-let: City apartment
Characteristics: A new city-centre development of apartments can provide a good buy-to-let property for highly desirable tenants such as young professionals. Buying multiple units off-plan will usually secure further discounts although apartments will need to be furnished to a high specification, and competition in the city rentals market is very tough. The next trendy apartments within walking distance of the tube could steal your tenants and with it your income.
Long-termer: You don’t have much to spend, but would like a property with long-term investment potential and believe that you know which areas will see big price rises in the future
Ideal buy-to-let: Housing Benefit / DSS
Characteristics: Good returns are possible from a low initial expenditure on a family home at the bottom-end of the market. If you buy in an up-and-coming hotspot then strong capital gains could be realised when you sell up in 15 years time and in the meantime there is usually high demand for DSS properties. However they need to be managed very closely and there is an element of risk with rental incomes. Changing regulations with the introduction of the Pathfinder Scheme means that tenants are now paid a Local Housing Allowance direct, giving landlords less security but more flexibility when setting rent levels.
Nick Clark, Director of the Property Investor Show comments:
“There are currently so many different options available for someone looking to invest in property. The option that would best suit a specific individual is based on a variety of factors such as how much they plan to invest, how hands-on they want to be and the level of risk they are prepared to take.
“However the healthiest type of investment, regardless of personality type, is one that is well-researched. The Property Investor Show, with over 240 exhibitors and 100 seminars, should be able to provide all the expert advice and information potential investors will need, from financing purchases, to the next hotspots both here and abroad.”
