I attend Property Investor Shows regularly, which I go to in order to meet industry figures, property peers and to network. When I have time, I am also interested to hear how other companies present their wares.
Over the years themes emerge. Opportunists are always around to sell the latest ‘shiny scheme’ which arouse more interest than the property investments that deliver solid returns and have longevity
Want a profitable property deal? But avoid the downsides of Get Rich Quick schemes?
As human beings we are attracted by good deals and want them to work in our favour. In the property world this can tend to distort behaviour.
Take the issue of an impending tax increase or a tax relief being withdrawn.
Let’s take the introduction of the 3% Stamp Duty Land Tax (SDLT) surcharge for investors in the UK in April 2016. (Not to mention the additional surcharge for overseas property investors). Or indeed the SDLT reductions during Covid.
These highlight how a rush to meet a deadline can distort investor behaviour and prompt mistakes.
Some investors behaved rashly, seeking buying short-cuts to beat the deadline. This tax change deadline meant some property buyers started to use channels they may not have been experienced at using, e.g. auctions and got carried away, overpaying by considerably more than the costs of the SDLT surcharge of 3% they were trying to avoid in the first place.
Some investors buying unwisely, spurred on by short-term gain, which distorted their long term value judgement and didn’t properly check the numbers or carry out sufficient Due Diligence on the properties.
This meant investors rushing into the unknown desperate sellers. More experienced property traders were able to profit from this, by snapping up these properties at discounted prices from desperate sellers unable to make their original aspirational deals stack.
In the same way, alternative investments are offered on the market for investors seeking to avoid the fallout from the Renters’ Rights Legislation. Government-backed social housing or Supported Living schemes are being touted as ‘hands-free’ property investments. Some of these contracts fall outside the Renters’ Rights Legislation, which makes them attractive.
But these aren’t for everyone, they suit a certain type of investor,. And many are not ‘hands-free’. There’s a significant amount of effort required in setting these up in the first place. This may be paving the way for more rash-decision making.
Make sure you check the claims out so that you know what you are getting yourself into.
Time-strapped Property Investors wanting to buy safely and make money
There is more likely to be a successful outcome for those investors among you, who can think clearly, weigh up risk alongside your personal circumstances and stay grounded in your decision-making. It is about knowing your investing criteria, code and ethics.
There is a role to play for alternative, or other high-yielding investments, alongside traditional buy-to-lets. They each occupy different parts of the market and serve different purposes for investors.
Know what you are doing and take on risk in a way that is manageable. Be aware of Get Rich Quick (GRQ) schemes and advisors that may be side-stepping important professional or regulatory issues and therefore may have different ethics to yours.
- Do your Due Diligence – check out the people you are dealing with, the type of deal you are considering, the business model and the channel you are buying through
- Properly understand the risk reward equation. High rewards usually come with high risk. Have you weighed that up?
- Try to focus on the medium and long term rather than the short term. It reduces the risk of an investment going wrong.
- Likewise ensure there are multiple profitable exits – a focused property niche may present much fewer exit options, possibly only one or two.
- Think through your financing options ahead of time, so that you can see if the deal works for you.
I work with time-strapped Professionals, Expats and Entrepreneurs who don’t have the time or local presence or have gaps in your know-how, to build property portfolios in the right way for you. Or who are simply stuck with little progress. This means you can carry on with your day-to-day life without spending a disproportionate amount of time getting sucked into investing.
If you want to talk through your plans and get clarity then please get in contact by telephone +44 (0)1932 849 536 or contact us
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Property Venture® is an award-winning, Boutique investment property specialist that provides a bespoke sourcing service for time-strapped entrepreneurs and expats. Having landlord, investment and development experience means we know how to help you build wealth through property with less risk and more clarity.
Disclaimer: Property Venture® is not offering advice. It has outlined information in layman’s terms for the reader to be better-informed.
With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs.
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