Finance
March 9th, 2010 at 03:59pm
Under Finance
This is the form of property investment that most people think of when talking about investing in property. You buy a place that is not your main home in order to make money by renting it out or, alternatively, you bank on the property making a huge capital gain in a few years and rent it out to make it pay for itself in the meantime. These days, most investors look at the total yield, that is, rental return plus potential capital gain, when deciding whether to buy.
Pros: Buy-to-let, in all its various guises, has become by far the most popular method of investing in property in recent years, and is the main way used of making money - or turning you into a ‘property millionaire’ - at property clubs and investment seminars. The idea is that you get regular income through rental yield which offsets the many costs involved in buying and maintaining a property, and in the process you become a landlord.
Although you incur capital gains tax on resale, there are very many costs you can set against this tax, such as refurbishment and improvement, utility bills, council tax, service charges, accountancy fees, purchase costs and legal fees. Plus, the process of indexation on capital gains tax means that the longer you own the property, the less of this tax you pay on resale.
A further benefit is that buy-to-let mortgages are easily available and constitute cheap borrowing. The idea is that you make a killing by selling at a profit when you have bought with cheaply borrowed money. Mortgages are still the cheapest kind of long-term loan available, and a prime reason for so many people investing in buy-to-let.
Cons: There can never be any guarantee that your place will successfully rent out. Although many property developers are now offering a ‘guaranteed rental’ for a period of time, you as the owner do not know whether this is a genuine rent, or whether the property will rent out at that amount when the guarantee period ends. Or, indeed, that it will rent out at all.
In many areas, landlords struggle to find tenants as the buy-to-let phenomenon has caused serious oversupply of properties, with many developers now building apartment blocks specifically aimed at this sector, and canny tenants negotiating rents ever downwards. Rents also do not always cover mortgages, as Tony and Cherie Blair found to their cost when they had to keep lowering the rent on their West London house.
More recently in the UK there is now the requirements for home information packs, where a landlord must supply his potential tenants with a home information pack or energy performance certificate to state that the property has been certified as energy efficient.
Being a landlord is hard work and requires input from you. Renting out a property is emphatically not the same as hiring out a car, for instance, as the complicated rules of tenure always apply. Tenants are human beings, and being a landlord involves very human transactions - it is emphatically not simply a matter of moving money around.
There are very many regulations governing renting out properties and also many ongoing costs associated with buy-to-let. Figures have to be worked out very carefully indeed, to make sure the expected rental will adequately cover your costs - and not merely the mortgage.
Tenants nowadays expect smart, modern, clean properties, and this means constant work maintaining and renovating your property to a high standard. The unexpected - such as no tenants, the boiler breaking down, the roof coming off in a high wind - can always happen.
The other major factor here is that if buying mainly for capital gain, you are taking a big gamble as you can never know for sure that the capital gain on resale will be worth it. You are looking into the future, a place where nobody has a reliable crystal ball.
Although many property professionals are in the business of prediction, as with all financial predictions, they can actually only go on past performance. Anybody who could genuinely and accurately predict future trends would indeed soon be a billionaire, but that person has never yet come forward.
Property investment can be very lucrative if you know what you are doing. Get the facts about investing in buy to let properties, including your obligations as a landlord in areas such as home information packs and energy performance certificates from a certified Lincoln EPC agent.
By Kym
March 8th, 2010 at 01:03pm
Under Finance
With the exception of the last few years, property has generally increased in value so much that there is a general belief that you just can’t lose with property investment. This impression is underlined by the growth of property clubs, where you pay to invest in newbuild and off-plan properties bought at a discount. Such clubs tend to be heavily advertised and appeal to people’s greed and laziness by suggesting that you can become a property millionaire in no time through tax liens, for little or no money down, and whether the market is rising or not.
The truth is that you can lose, but even so, property does historically come good most of the time - eventually. Also, investors in property can now, quite literally, have the whole wide world in their hands - or in their portfolios. It is now possible to invest in property in most countries in the world, so that your property portfolio can look as international as you like. Nowadays, anybody can be an international investor and financier! Anybody can swagger around brandishing an impressive-looking international property portfolio!
So why do I believe that property, in general, makes a good type of investment?
In the first place, everybody understands property, simply because everybody has to have a roof over their heads. Everybody also understands that home occupiers have to pay rent or a mortgage in order to continue living there. It is also self-evident that even when fully owned and mortgage-free, there are continuing costs attached to living in a home.
This is knowledge that we all have. By contrast, you have to be quite financially sophisticated to understand how equities and other aspects of the money markets work. You also have to be numerate and actually enjoy number-crunching. Successful people are doing sums in their heads the whole time; it is second nature to them. But few ordinary people really understand how and why stock markets crash, or how the stock market performance in, say, Japan, can intimately affect other stock exchanges around the world.
Few people, too, readily understand futures, hedge funds or derivatives. You have to be quite deeply interested in money and all its ramifications to be able to play money markets. It is a mindset which not all of us have. Yet everybody knows what estate agents and letting agents do.
Then, historically, at least, property is solid and substantial and far less liable than equities to stock market fluctuations, to crashes and recoveries. Obviously house prices fluctuate, but there has rarely, if ever, been a complete crash. One reason for this is that all real estate is built on land which will never go away. A further reason for the dependability of property is that everybody needs a home, whereas we can manage without a car, foreign travel, the latest electronic gadgetry, if we have to.
Then, there is almost always a shortage of housing. And while house prices can go up and down, there is always going to be some value in land. By contrast, the entire value of an equity can be wiped out, in a severe downturn of the market, performance in the High Street. And there is little the individual shareholder can do about this, except to buy and sell at the right time.
When you invest in stocks and shares, you may have very little control over whether their value rises or falls. To take a famous example, when former jeweler retailer Gerald Ratner made his notorious remark at a City dinner that his sherry decanters were ‘crap’, £500 million was immediately wiped off the value of Ratner shares, with the result that many shareholders lost very large sums indeed, through no fault of their own,
But even if somebody calls your house ‘crap’ - as ’specialists’ on TV home design programs often come perilously close to doing - it is still unlikely to lose all its value.
One way to invest in property is through tax liens. Investing in tax lien certificates is becoming more popular, especially within the current economy. If you currently invest in property but aren’t using this investment vehicle you should definitely look into it.
By Kym
February 17th, 2010 at 02:06pm
Under Finance
I wrote this article in the belief that for the person who wants to attain financial security, and have some fun, excitement and flexibility in the process, property makes the best kind of modern investment.
But what does it actually mean to ‘invest’ in property? What is the real difference between ‘owning’ property, which the vast majority of people do anyway nowadays, and ‘investing’ in it?
Don’t we automatically ‘invest’ when we buy property, given that property generally goes up in value? Yes, in a sense, but the main difference is that when you consciously invest in property, as with any other type of investment, you are buying with the express and overriding intention of making a profit.
When you specifically invest in property, you are doing more than just depending on a rising market. Instead, you are hoping to make a gain whatever the market, as you are using money-wise skills rather than just wishful thinking.
At its most basic level, when you invest in something, you put a certain amount of money into that commodity in the hope that you will get vastly more money out, and that during your ownership, that commodity will have increased enormously in value.
This is the theory behind all kinds of investments. Investing is seen as a way of making money over and above what could be made either by earning, or by simply saving up.
Investing is a different matter from just saving, where you put your money into a totally safe, if unexciting and low-yielding bank or building society account. There is no risk but there is precious little gain, either.
Just hoarding money up will never make you rich; you have to make your money work harder than that. And in fact, whenever you put money into ultra-safe deposit accounts, you will in effect be losing, as not only will interest rates be below the rate of inflation, you will have to pay tax on the interest, and the capital sum will never increase.
In real terms, its value will diminish over time.
And if you want to put all your money under the mattress, you may never have to pay tax on it, but you will never make on it, either.
But - when you invest, as opposed to just saving, this means you are taking an element of risk with your money. Unless there is some risk, it is not investing. And while you may make a lot of money from your investments, you will stand to lose as well. Investments are never guaranteed, but wise investors balance the risk so that the scales are heavily weighted in their favor.
When you invest, whether in property or any other commodity, you are basically backing a hunch, but you cannot know for an absolute certainty that you will gain.
But of course, the more you know what you are doing, the smaller the risk becomes. Although this may sound an obvious thing to say, all day and every day people are investing in products about which they know nothing at all. Nowhere is this more true than on the money markets, where amateur investors are losing fortunes all the time because they haven’t a clue what they are doing, and have not bothered to understand the nature of their investment.
Some people dismiss the whole concept of investing, believing it is a euphemism for gambling and that there is in effect little difference between the two. But although the unexpected, whether local or global, can always happen, investing is not exactly the same as putting money into fruit machines or onto a roulette wheel in the wild hope of winning the jackpot. Investing has elements of gambling, true, in that the eventual outcome can never be guaranteed, but it is not, or should not be, a matter of random chance.
There are many products to invest in, from equities to fine art, antiques, wine and classic cars, and many investment ‘opportunities’ are being advertised all the time.
Investing in property is just another method of making money - but one which can be supported by a very real process and development systems to realize considerable potential gains with few if any long term risks.
Investing in property can be a very rewarding business model, but is not without it’s risks. However, you can use tax lien certificates to achieve the same goals with much less risk if you know how. Once you understand how a tax lien certificate works, you could open up a whole new avenue of investment.
By Kym
July 21st, 2009 at 04:59am
Under Finance
It goes without saying that shopping is very addictive and every person knows this. As a matter of fact most of the time, the household budget is sacrificed once you go shopping. You need also to be aware of that shopping should not give you headaches as long as you understand how to budget. Here are the things that you need to remember:
1. Always remember to spend your cash wisely whenever you go shopping. Bring only the strict amount of cash you need in buying your items. To make certain that you only buy the vital things, you have to make a list of the items that you need to buy. You may then budget your money wisely and will prevent you from buying things that are not that significant.
2. It is prudent that you evaluate prices from various stores before buying an item. Do not limit yourself to just one store. There are stores that offer the same quality but can have a lower price. A smart thing you may do is to be attentive to the prices of the items that you buy regularly when shopping. There are instances that a store has an untimely changing of prices on various items.
3. It is recommended that you do your shopping during the end of the season. Prices of many items, in particular clothes, are extremely low and affordable during this time of the year. You may buy clothes in the months of August and September if you are seeking bargain clothing for your summer wear.
4. You may shop in dollar stores where you can get items that are on sale and where prices are low. Though the quality of some items is not the same when you buy in malls and shopping galleries but the merchandises are still new and not yet old. These stores can provide you the best prices that can cope with on your budget.
5. Another approach to save cash while shopping is to cut back the travel you make in finding the stores you want to buy an item. You may take a stop on your daily way to check if the items you buy regularly have not changed their prices or are still in the price of your budget. You may buy the item even before you do your shopping schedule. This can save you fuel and time.
6. Try to find discount stores that offer quality items that have discounts and can offer an incredibly reasonable price on your desired item. As a matter of fact the prices on discount stores may vary depending on the season of the year. These stores can be located in big shopping areas like in malls and shopping galleries.
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By joanne
July 21st, 2009 at 04:41am
Under Finance
Needless to say that patience is a good feature. It takes a little character to show such levels of moral excellence, but did you know that by doing so, you could put aside cash at the same time? Read on to find out how you can spend less by emanating the virtue of patience.
Have the patience to walk instead of drive. It saves you gas, parking and the stresses of driving. Walking improves your health and well being while saving gas cash.
The first issue that you need to know about and considered to be the most fundamental for any person who wishes to save money effectively is that you need to be patient: compare before you acquire. From individual clothing to health club memberships, from plumbing services to insurance plans, from auto accessories to a new home; compare the offers of 3 to 5 suppliers or service providers before finally settling with one. Let them know that you are taking the time to search the market and they may just be able to offer you the best savings. Really, the patient consumer is a winner!
The other important detail for you to take into consideration is that you should utilize coupons as much as possible. Be patient in cutting them out and going through them before making any purchase. Pack them together with your grocery bag or in the car so you can utilize the discount coupon at every opportunity. An Individual can put aside $20 - $50, just by using the coupons.
Bear in mind that it as well essential to track your expenses. Have the patience to keep your receipts and record all your expenses, no matter how small or frequently they occur. By doing so, you are made conscious about where every single penny goes. Also, you will know when you have spent too much on clothing, when in fact you still need to settle your credit card balance, or pay the mortgage. You will have a better hold of your financial health, by patiently tracking your finances.
You should also know that you should hold-off and sleep on it! If you are about to acquire a $100 item, hold off the acquisition until you’ve given it much thought, say sleeping on it for 1-2 nights. If after such time, you decide that you certainly need and can have the funds for the purchase, then go ahead. Nevertheless, you’ll be surprised at how much you can put aside by just sleeping and thinking things over.
Finally there is a need to mention here is that you should devote money in long-term investment. Understand that when you take up long-term investment, you do not need the cash for now, and it is not considered as part of your daily finances. Still, such money when set-aside will reap great rewards in the future.
Exude moral excellence by patiently saving for years to come, starting now!
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By joanne
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