Investment property continues to be a popular form of investing for the future. Some chose investment property as a way of funding educational fees in the future. Others may choose investment property to help secure a more financial future, fund additional investment property purchases, or they may choose investment property as a way of creating passive income so as not solely dependent on their discounted mainstream employment.
Investment Property – Interest Rates
Despite recent interest rates rises, the property investment market in the UK remains strong. There are several reasons why investment property in the UK has remained a strong contender in the investment market. The UK investment property market has experienced a high level of growth, especially over the last six years. But historically, property in the UK has doubled every 10-15 years. In the last few years, the UK has seen dramatic increases in investment property and incentives for landlords and investors, which has seen some investors buying investment property in the UK for up to and occasionally with over 20% discounts. These represent significant savings to a property investor buying multiple investment properties and, subject to sourcing the best buy to let mortgage products for these investment property deals, can often result in the property investor having the ability to buy an investment property with little or no deposit.
Investment Property – Finding Discounts
Finding investment property from property developers with genuine discounts can be a time-consuming exercise. It is important to identify whether the discount being offered for the investment property is genuine or whether the gross price has been inflated on the investment property to allow for the discount. Establish whether it is a genuine discount on the investment property by getting comparables of other investment property that has recently sold and at what price. Although bear in mind, some investors can negotiate better discounts on investment property than others. This may be due to the volume of investment properties that they have either bought already from the property developer or the number of investment properties they intend to buy. Just as important to establish the likely rental figure for the investment property as this will often determine the overall loan amount you can achieve on the buy to let mortgage loan for the investment property.
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Investment Property Hotspots
If an investor is looking at an investment property in property hotspots or areas that are experiencing high levels of regeneration, it can sometimes require them to fund a higher level of deposit for the investment property initially whilst the rental figure remains relatively lower than the general market average for a new build investment property of the same value in another area. Property investors with a long term view on an investment property will still see this as a positive action to take for their investment property portfolio in the knowledge that as the regeneration area becomes more developed, the potential rental demand for the investment property will increase. At that point, they will use this time to look at re-mortgaging their investment property to release the capital that they had additionally funded. Typically, a buy-to- let mortgage for an investment property requires the investor to fund at least 15%. Although some buy to let mortgage lenders offer up to 90% buy to let mortgages on investment properties.