Property investment
Many investors have turned to Property as an alternative to investing in the
Stock Market.
Property investment falls roughly into four categories:
Commercial Property Funds
Domestic Property Funds
Direct Investment in Domestic Property - Buy to Let
Direct Investment in Commercial Property Projects
Commercial property funds
Commercial Property Funds acquire warehousing, shops,
offices and other commercial properties, with a view to
having good quality tenants. Fund income is generated from
rents and may or may not include revaluation assessments of
the property itself. Many funds aim to achieve double figure
returns, but investors need to consider the location of the
properties, and the track record of the company offering the
investment.
Domestic Property Funds
Domestic Property Funds operate in a similar way to those offering Commercial
Property, except that they purchase housing stock for rent, often to students
and families receiving benefits, groups that are less affected by price
fluctuations in the housing market, and who will always require accommodation.
Many funds are UK based, and aim to achieve an investment return of around 9% -
11% pa.
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Buy to let
Direct investment in domestic property
can simply be purchasing a house in either the UK, Spain or other location,
with a view to generating an income through letting.
Investors need to be aware of the tax treatment of such
investments in the country in which the property is located, and consider the
financial effect of periods without a tenant, particularly if there is a
mortgage on the property.
Buying off-plan
Many investors in Spain are attracted to buying property 'off-plan',
particularly in popular coastal locations and around golf courses. Initial
costs are typically around 40% of the purchase price, with the balance payable
on completion. Although it is possible to sell on at this stage at the then
market price, investors need to consider the financial effect of a change in
market conditions by the time the property is completed.
Commercial property projects
Direct investment in commercial property projects are short term in nature,
(never more than 12 months).
Investors in a project 'loan' capital to a property developer through a
Mortgage Deed, and receive monthly income during the term of the loan.
Income is usually around 1% per month, and is paid through a UK solicitor who
also draws up the Mortgage Deed secured on the property being developed.
Usually, no loan will exceed 70% of the property value, and directors'
guarantees are secured from the borrowing company.
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