Anyone who has been reading my blog or who follows me on Twitter will know that whilst I see some significant challenges ahead I still think you can make money in property. It may not be as easy as it once was – you can’t just buy something, sit on it and find it’s worth more six months later even if some people will accidentally find that one can. These days, even in or should that be espeically in London it will probably take three years for house price growth to cover the costs of buying a property today so advice for those thinking of getting out there and buying a home or an investment property, I’m sure will be most welcome.
James Pickford has written a interesting guide in the FT. You will need an FT subscription for full access but the gist is that most investors make money based on paying a lower price than they do from charging a higher rent. Common sense you may say but it’s amazing how many people ignore this. Research from my friend Johnny Morris at Countrywide confirms that the 10% of landlords who achieved the highest yields earned 4.1 percentage points more than the average landlord in the same local authority. The research revealed that, when it comes to overall returns, buying well matters much more than letting well.
Time, energy and money is best spent when you are buying a property and being prepared to walk away from a deal even if some other mug is prepared to go through with it has always been my top tip to those buying either for themselves or as an investment. It’s the only time you don’t have to rely on someone else – either to pay the rent you need to deliver the yield you want or to pay the asking price you are demanding when your time comes to sell.