Property for Profit

If there is one area where most new investors fall down it is probably professional advice. many novice investors, quite rightly, try to keep a tight control on finance and expenditure on projects and it is sometimes tempting to do without

* the full structural survey costing £1000 or
* do the plans themselves saving money on architects fees or
* find their own mortgage without paying comission to a mortgage broker

All the above items have (and will) cost investors losses of many times the cost of the small initial savings, in fact many have gone bankrupt simply from not taking professional advice when it is required. Some have gambled on paying for professionals and won – but many more have lost, if you want to make money by gambling then property investment probably is not the best choice!

Raising finance as a property investor is unfortunately a requirement for most of us, even seasoned property developers who have made £millions via property over many years still require funding on most projects, there are few investors nowadays with sufficient liquid capital to fund a project from their own resources.

Alternatives to mortgages for funding property development or purchases
Mortgages are not the only sources of funding for property projects but they are the most common. Other methods include raising money via credit cards and personal loans, secured loans on existing property and even venture capital.

Some investors new to property really struggle with this concept of location, location, location. Although it is a huge cliché it is probably the single most important part of the decision making, a mistake made in this area can ruin the whole possibility of turning a profit no matter how much time and money are sunk into the project.

Some points to note:

A smaller property in a good location is almost always a better bet than a larger one in a bad area!

This is a bit of a “no brainer” as our friends across the water would say. Making a profit from improving your own home is MUCH easier than investing in another property, remember:

• It is easier and cheaper to raise finance on your home with lower interest rates and less restrictions.
• When renovating another property for investment and resale or rent the money spent on interest repayments while refurbishing, is money lost (this is why it is even more important to stick to a strict schedule when refurbishing other properties), whereas on your own home some of the interest on borrowing can be offset against the cost of living in the property, you would have had to pay a mortgage anyway!