We all have predetermined beliefs, and you often hear people passing on property investment advice like:
Property is a good long term investment
Safe as houses
Put your money in bricks and mortar
I for one fully agree with these statements. If you want to be a successful investor you need to be able to see through all the bull crap and be careful what property investment advice you take. Two of the most serious misconceptions we hear are “I would never invest in new build property” and “off plan is too risky.” You have to ask why this is part of your belief system, it’s true people have lost money in new build and off plan investments but people have also lost money in all types of property investment, in fact people can lose money in any investment full stop. So do these belief systems make good property investment advice in today’s market? Let’s look at new build property first.
Someone people, even experienced investors have said to me. I will never invest in new build property and I immediately ask why?
Most people don’t know why but some will answer because it’s over priced. Let’s look at this and ask a question, when is a property overpriced? Answer: when you pay too much for it. Why on earth would you pay over the odds for a property when a quick internet search will help you establish the facts?? You wouldn’t, yet some overexcited ‘investors’ did before the credit crunch kicked in, fuelled by fear, greed and poor decision making. As quickly as you can establish if a property is overpriced you can just as quickly establish if it is below market value. So i f you can buy a new build property at below market value then why wouldn’t you? In fact buying new build is great because you have no maintenance issues, you generally get a 10 year guarantee and it’s appealing to tenants. Buying new build is great if you want an investment with fewer headaches.
‘Don’t do Off plan, it’s too risky’ is another piece of poor property investment advice I hear quite regularly.
The truth is if you buy in a overheated market then it is but if you buy at the bottom of the property cycle then it’s one of the most effective ways to invest in property. You can normally control an asset with a 10% deposit; this is a massive use of leverage. You can also get your hands on an off plan development for a discount meaning you are buying below market value. You have to be in a position to finance the property when the development is complete and you should never stretch yourself but if you are in a position to invest in off plan then take a look at the exciting opportunities available. Many people now consider the UK property market to be at the bottom of its cycle, creating an ideal opportunity for off plan investors. The longer the off plan period, the better, as you have more chance of seeing a rise in the properties values. Ideally at this point of the market you would want at least two years off plan or 18 months for London. So you have to ask yourself, what’s more important – achieving your goals and financial freedom or a portfolio full of poor property investment advice and misconceptions? Don’t be lead astray by other peoples beliefs, do your own research and don’t deny yourself opportunities. If you would like more free property investment advice read our blogs and sign up to the newsletter below.