Last Updated on May 1, 2023 by Umer Malik
Property investment UK offers up to 18% return on your investment in just four years – sounds attractive long right?
If you want to invest in a buy-to-let property, then a good investment and a good place to buy is in a development with an up-market tenant. Whilst there are many ‘head lenders’ that will offer mortgages and finance a property that is perfectly capable, for the investor with more experience and a clearer idea of what they want, a development can sometimes cost more but offer a better return. If you can find a source to sell my house quickly london.
What does this mean to the novice property investor?
If you are going to buy development and want to get a property investment with a guaranteed 6% uplift to value you are looking at 75 to 80% of the normal property value of the land and the building. Of course, other factors come into play such as the ability to get finance and an appropriate tenancy mix. Have a look at our Exclusive Property Guide below for more information on where to find these types of properties. If you DON’T want to get involved in the development, just look out for our free report on “Top 10 Steps To Your Property Investment Success – Part 1, Where To Find Your Perfect Dream Property For Great Profit!”
Now let’s look at a couple of ways you can profit from your investment property development:
1. Increase in Value of your property investment
You can either gain a full property investment return by actually buying the property yourself and renting it out or you can buy some units (Apartments, flats, rooves, etc. to rent) in a development that would have increased in value for any landlords and cash in each month when that development is full.
If you buy the property yourself, you will pay what the real estate agent calls vendor finance (Vulture Funds, etc. or similar – each upwards of aroundDepositals (about 10 – 15% of the property price according to various agents).
If you choose to buy the units in the property, a deposit of perhaps 10% is placed, and the remainder is on a normal purchase price. The remainder is paid on completion and tenants are found.
Once again, if you buy a unit in development the developers will pay for the units on completion and any further deposits.
2. Your rental income increases with property appreciation
Let’s assume that properties are increasing in value and you rent a unit out for say $350 per week.
If you choose to rent out a unit in a property development, you may get a higher rental return, say 8 to 9% ( nearer 10% plus) on your rental investment because of higher rental body corporate charges. A property development rental return of 9% sounds very unlikely, however, you may find people who are prepared to do this!
If you are a long-term property investor, there are a couple of risks:
Rental returns may be lower due to lower rental body corporate fees
You need to be careful about 2 ” bells and whistles” costs:
Renovations: if you do not put a lot of time into your property, you will have to pay to have it renovated, possibly at your own expense. The higher the unit in the property, the higher the renovation costs will be.
So, price your property according to the highest numbers here:
- Higher than average rental return
- Property appreciation
- Withstanding risks
- Rental returns
- Property development investments
Remember, property development investment or property renovation should be considered as a long-term, medium to long-term strategy.
Apart from this, if you are interested to know more about Property Investment in Wakefield UK then visit our Real Estate category