Property Investment Strategy – Fast Growth
If your property investment objective is to achieve the fastest possible growth, then you need an astute and aggressive strategy that supports it.
Whether you intend to increase the value of one asset for financial gain in the short-term, or quickly build a portfolio of properties for lasting wealth in the long-term, here are some things to consider:
Repossessed or distressed properties often become available when the owner, whether that be an individual or a bank, needs to make a quick sale. To achieve fast growth on this kind of investment you need to be able to act quickly.
Having funds and a solicitor ready to proceed puts you in a great position to negotiate a good deal and secure a heavily discounted purchase price, as does having tradesmen or estate agents ready to prepare and promote your property for the sale or lets market.
However be aware that prompt action must be balanced with careful property selection. Always make time for thorough surveys; the fast growth potential of a property can easily come undone by problems overlooked during a quick purchase.
Furthermore, the quality and potential of a property investment needs to be evaluated in terms of its location. Although property is in demand across the UK, investing in areas where the market is strong will maximise your gains.
Achieving capital growth quickly requires organisation and ready funds but more importantly, the careful balancing of your capital and liquid assets.
If you have £100k you want to see fast growth on, spend as little as possible. This applies to the purchase price, the renovation costs and how much you tie up in a mortgage.
To minimise debt you may choose to avoid the banks, invest your entire stake in one property and enjoy all of the profits, but there are smarter, more lucrative ways invest.
The latest House Price Index statistics from the Office for National Statistics show that in the last year, without factoring in regional variations or any works undertaken to add value, house prices rose by 12.1%.
If you tied £100k up in one property, your profit would be £12,100.
However, if you bought the same property with a mortgage at its maximum loan to value, say 75%, you’d only tie £25k up, leaving you £75k to invest in other properties. If you invested £25k in three mortgaged properties, then in the same year, you’d have £25k in the bank while your portfolio gained £36,300 in equity.
This is known as High Gearing which in simplest terms means using someone else’s money, namely the bank’s, to finance your investment and take responsibility for a greater proportion of the risk.
Remember that fast growth is not necessarily lasting growth. The initial gains you make as a property is brought up to date for the sale or rental market will eventually stabilise. At that point, you can sell it, maintain it as an asset or extract equity from it to invest in furthering your portfolio.
Although your plans may change, it’s important to have an exit strategy clear from the outset to keep you and any third parties focussed on achieving your objectives and track their progress.
The fastest gains are often made on the cheapest properties and at National Property Portfolio, we source residential and commercial buildings from banks and auction houses across the UK that carry generous, off-market reductions.
To gain exclusive access to our listings simply register your details online. Alternatively, if you’re ready to invest and want advice on an astute and aggressive, fast growth investment strategy then contact our team on 0800 321 3975.