INVESTING IN PROPERTY

Property has long been one of the most accessible and tangible forms of investment for crew.

 

 Whether yachting is a short or long term career for you, increasing your income and future net worth through property should be something to consider.

 

This said however, poor property selection, bad negotiation or lack of knowledge can lead to you wasting time and money. Below are some fundamental pieces of information on property investing that are useful to know.

PROPERTY AS AN INVESTMENT

The ultimate goal of investing in property is to grow your money, there are two ways in which this can happen.

RENTAL INCOME

 

The first is the rental income which you will receive each month from your tenant, a good investment will be able to pay you a substantial surplus each month, even after you have paid the mortgage and other costs.

To compare a property to other investments you have to evaluate the return. Return on investment or ROI is calculated by dividing the total amount you will invest (deposit, fees, tax etc) by the rent you will receive each month after costs (mortgage, insurance, management etc).

For example:

Property A costs £90,000, to buy Property A you will invest £22,500 deposit plus £5,000 in fees and taxes. In total you will invest £27,500.

 

Property A will let for £400 per calendar month (PCM), after the cost of your mortgage and fees you will receive £150 PCM.

You have invested a total of £27,500 and receive £150 PCM or £1,800 per annum PA.

The return on your investment is:

(£1,800    ÷      £27,500)       x         100          =          6.5%

CAPITAL APPRECIATION (INCREASE IN VALUE)

The second potential benefit is the capital appreciation, or rise in the properties value. Due to a combination of factors, the UK has been enjoying a steady increase in house prices over the last 60 years. Although its important to realise there are no guarantees this will continue, we can use it as an indicator of potential future growth.

Although the uk property market has had its fluctuations, historically house prices have doubled on average every 9 years since the 1950's. Its important to pick properties with strong fundamentals to help withstand market volatility. 

As with any investment, its paramount to appreciate the risks, investing in property can be risky and although this risk can be managed, it is impossible to remove it completely.

LOCATION

Where you decide to purchase property will probably be one of the biggest choices you have to make. Different locations provide investors and home owners with different benefits and disadvantages. Some areas will achieve higher rents in relation to price paid and some areas will perform poorly on rental return, but have a higher chance of growing in value.

The best thing to do is think carefully about your own goals. Investing close to where you're from may seem like a good idea, but if you don't live in an area with a good rental market, or an area where house prices have stagnated, then it might be better to look further afield.

 

This is especially true if you are planning on appointing a management agent to look after the property, as this means the property can be anywhere nationally. 

COSTS

It's important to understand the associated costs with purchasing property. Below are some estimated figures based on previous purchases to give you a rough idea of fees and taxes.

These figures are based on a straightforward purchase of a Buy to Let property, with a purchase price of £80,000. If you have to let your property then there will be additional costs relating to this. 

Anchor Property provide two distinct products. Depending on your requirements you may wish for us to look after part, or all of your purchase and letting. Go to the downloads section and sign up to access full details of what we can offer.

SITES YOU SHOULD VISIT

We strongly recommend you do further research yourself to give you an overall understanding and base knowledge of property and property investment. These sites listed are key resources we use, and that we'd love to introduce to you.

www.thepropertyhub.net

www.rightmove.co.uk

www.zoopla.co.uk

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