Smart Investments Deserve Smart Finance – The Investment Property Loan Portfolio

In the past decade bricks and mortar have surprisingly been one of the more glamorous forms of investment globally. When compared against the volatility of the stock market between 2000 – 2005, property has delivered excellent returns while securing the investor a prize that is more tangible than stocks. For lengthy periods in the 1980s and 1990s, investors lost the enthusiasm and to some degree lustre for UK property especially when growth performance was measured against technology shares. However when the stock market suffered in 2001 and 2002 UK investors moved to the safety of property and residential and commercial property came back into favour as it is a tangible asset. The investment property loan portfolio considers the investment finance (loan) sourcing for property held within such portfolios.

Some would argue that property has reliably been a smart investment over the long term. However smart finance for strategic property investments and portfolios has not always been readily available to smaller investors. Secured loans and second mortgages have become the mainstay of new finance supporting new property portfolio investments. New residential buy-to-let investments have become very trendy in recent years in support of entrepreneurs building such portfolios. Commercial property as a secondary property investment has also been delivering strong yields and remains a good mix in the investment property portfolio.
Investors continue to switch equity or loan funds into what they now believe is a safe, consistent rewarding sector. Futhermore, many investment funds now boast double if not triple-digit returns consistently over three, five and ten year periods.”

Buying and investing in property is a subjective science but smart investments are derived from smart research into the type of property, location of property, demand for property and calculated return on the asset. Just as important is the source of finance and as stated in the title of this article “Smart investments deserve smart finance”.

A smart investment property loan is one that factors in the key points raised earlier but also considers the short term and long term cost of financing beyond current interest rate charges. When considering the cost of finance (COF) investors should consider the up-front cost of purchasing properties within the portfolio and ensuring there is sufficient equity within the portfolio to absorb challenges to repayments caused through occupancy gaps, unplanned maintenance, interest rate rises and any negative property price changes. Furthermore smart investors should seek flexible finance without expensive sting in the tail exit penalties and plan to swap sources of finance to maximize cost-effectiveness as financial institutions offer promotions.

The strategy of the investment: Most important should be the strategy of the investment. If the loan period for the investment is for a two-year period, then plan for two-years. You can always review after two years and change your strategy. If the investment is for a ten-year period loan, then plan for a ten-year period. You can always review this at the mid-point of 5 years. The key point is to plan to be successful. If you lay out your strategy and cost models and set your realistic goals out from the outset then you will be able to manage the expectations of returns.

Smart use of pensions enabled through recent UK government initiatives with SIPPS may also be a good source of affordable finance. Commercial property can now partially be used as part of retirement planning. Self invested personal pensions can invest in this asset class which brings a number of financial advantages. An example would be where rental income is not taxable when it is paid in to the SIPP and property is not subject to capital gains tax when it is within this structure. Furthermore, it may be possible for a number of SIPP investors to club together and acquire property thereby allowing investors to buy larger properties effectively. This grouping is referred to as a property syndicate whereby individuals have a share of all costs but also returns such as rental income and capital appreciation in proportion to their share of the property.” The risks when forming syndicates are typically lengthier commitments, less flexibility with the investment in terms of moving assets and the big risk of one the SIPP investors dying or differences in the investment strategy.

What is the Best Investment Strategy For Me?

I often hear clients asking what is the best investment strategy for their particular circumstance and it Raises the question. What is the best Investment Strategy?

My response is always “All of them”. How can I say that? Well a diverse wealth portfolio will always provide the best of all worlds.

I have a friend who will swear black and blue that Property is the way to invest. Well there are actually two types of property investors. The “passive” investor is the type of property investor that buys a property with a view to collect the passive income and accumulate capital growth over the long term. An active Property investor is the type of investor that actively looks for deals coming onto the market, will purchase an option on that home, usually with extended settlement and then sell for a profit.

Some choose the stock market. There are also two ways to invest into the stock market. Most Mum and Dad type investors look at purchasing a “Blue chip share” with the long term view of holding that share for the long term, again the strategy here is to earn long term growth. The second option within stocks is to choose a short to mid term investment strategy and trade on a day to day scenario. This type of investment strategy can be one of the most thrilling and exciting strategies there is. It also carries with it the most risk and those that become victims of the global financial crisis are testament to that risk.

Business is also an excellent investment strategy. It is an often overlooked way to invest funds, however there are more and more vehicles becoming available to invest into multiple levels of business with minimal risk and maximising returns.

The key to any investment strategy is to choose wisely and diversify your portfolio. Even starting on a small scale, you can choose to invest into “smart” investments that minimise risk and maximise your return. The trick is to do your homework, set goals and choose wisely.

How to Get Rich From Property Investment Strategies

Property investment is a long-term investment, you may not get rich fast. It’s very much like planting a seed, in order to enjoy the harvest many years later. Of cause there have many ways to make fast money in properties provided you are lucky and smart to buy below market price and sell above market price.

Before to start for our long-term property investment, there have some basic several basic property investment strategies we should consider before to make a decision for long term investment.

o You need to make sure your financial situation and can affordable to invest it without stretching the budget uncomfortably.

o You should always consider the best location and right direction for investment. None of the important thing is LOCATION. A good location can bring you fast money of positive cash flow to cover your operating costs and debt payment. You may want to avoid investments with a negative cash flow.

o Pay the correct price properties at the proper time. To do some research on the best places to invest and figure out the present market trends.

o Get a good and professional agent to help you to deal with the buyers. Choosing an expert property agent can make a big difference that can get a maximum return of your property transaction and reduce your burden on legal issues.

o Find the right Lawyer who meets your needs. They know how to deal and improve profitability and can advice you on various real estate investment strategies.