Property Investment Ideas

Property, you'll hear it said the length & breadth of the country that property is one of the best investment ideas of all time. Chances are that statement is right. Even in this counry in this current financial climate, property investment is going to bring you a decent, and pretty safe, return.

There are risks of course, but like anything else if you don't do your due dilligence first you are asking to be burned. A lot of people over that last few years have jumped on this band wagon and are currently, as the Americans like to say, "upside down" with their property investments. This means they owe more than the property is worth. And why is this?

Becuase countless people following the herd went and took out mortgages on properties with the view to renting out. A noble view of retirement planning if you can wait 25 years for it to mature. But a stupid move knowing how the market can (and regularly does) crash.

I know I've made this sound a bad investment idea up to now but done right it can be one of the best.

Let's look at an example. You buy a property at auction for 100k, and spend about 15k doing it up to a high standard. Your outlay is 115k and you can rent this out for varying amounts depending on location. But an average (probably on the low side) rental return these days (2011) is about £500 per calendar month. So you are getting back 6k per year in income. There's 6% to start with. Let's say over the long haul property goes up by an average 4% a year you are now taking in about 10% per annum on your initial outlay.

If, and it's a big if, you could re-invest that return into other properties you could be sat on an extra property every 7 to 10 years. Now, say you start looking at this as a retirement investment when you are 40, you could be sat on 3 or 4 decent properties by the time you are 70. And that may just pay for a decent retirement for you and your partner. I say partner 'cos no one wants to grow old alone ;)

I know I mention 70 as a retirement age and at the moment it isn't, but rest assured that when you get to 70 if you are 40ish now, that will be the minimum retirement age for a man in the uk.

Good luck with any other investment ideas you might have, but whatever they may be, start now!

Monty Burn

Founder - Investment Ideas