Property Investment: Advanced Principles

On-line content taken from the Provestor eBook presented in periodic serialized weekly format. Terms and conditions - legal disclaimer.

Part One

Posted 20th November 2007

Theory

Is it Time You Created a More Prosperous Life?

For those of you who have not purchased investment property yet, perhaps this is the best time. We may never in our lifetimes have such great prices (40 cities under £150,000), high appreciation rates (25 cities over 20%; 14% nationwide average) and very low interest rates. Anyone who reads Robert Kiyosaki’s book Rich Dad, Poor Dad realizes that you will never become wealthy through your job and conventional retirement systems, or the stock market. Perhaps you should overcome your fear or scepticism enough to just try one property. It only takes about £6,000 for an average property with 3% + VAT down.

Property provides the investor with a variety of positive aspects:

During the 5 years to November 2004, house prices have risen by 97%
The FTSE 100 index fell by 27% over the same period.
Property has been a consistent year-on-year out-performer of stocks and shares
Over the past 18 months, the market in the UK has enjoyed exceptional capital growth of between 20%-30% per annum
The latest Government projections show an increase of households of up to 14% by 2021, whereas Halifax predict a housing shortfall of at least 400,000 by that date
Whilst the number of households has increased by almost 50 per cent over the last 40 years, the number of people in the average UK household is reducing. People are living longer and divorcing more frequently. There is also a greater trend towards single occupation - people preferring to live on their own, particularly in their youth and old age
Property has become a recognised alternative / subsidy to under performing private pensions
It provides the prospect of withdrawing tax-free lump sums
It offers the potential of releasing funds for future investment purposes
It can be passed on in perpetuity
It offers strong capital growth potential

Buy now while interest rates are still low – they will only get higher
Buy now while prices are still affordable: £115,000 – £200,000
Buy now while there are still affordable second-home and retirement properties. Soon they will be unaffordable
Buy now while the rental market is good & getting stronger in many areas
Buy now to assure fixed rate mortgages & lock your future in
Buy now while it is still easy to qualify (much harder in the past and probably the future). It’s never been easier to qualify for multiple properties
Buy now while there is so much available money and financing (in 1978-80, there was no money available)
Buy now while down payments are still low (used to be 20% down for investment property and may be more in the future). Now it’s 5% down
Buy now while appreciation is the highest ever – it may not happen again in your lifetime. It’s 14% now, normally it’s 7%
Buy now for your kids – they will not be able to afford a residence or a 2nd home in a few years in places like NY, San Francisco, Hong Kong or Japan

Please Note: Some installments are quite short, like this first section, as the eBook does not divide into neat, equal chunks. However next week's section is a whopper!

Check back in a week for the next installment - 'The Opportunity'