Have you ever had your fingers burned with a property development?
Have you had long periods of void tenancy and still had to pay the mortgage?
The property industry is littered with stories about inexperienced property developers who have bitten off more than they can chew and not made the money they hoped on their property investments. If you ask people about property investment they usually think about buying a run-down property from an auction, doing it up and then selling it on at a big profit. Whilst there are investors who do very well at this, for every good news story there is a hard luck story where things didn’t go quite to plan and everything cost more and took a lot longer than expected.
Typical problems that happen, especially with inexperienced investors, is spending unnecessary money on needless improvements and not doing the necessary research prior to making the investment. Excited by the prospect of refurbishing a property, inexperienced investors will often not research the rental ceiling of the area they are investing in. In any area there will be a rental ceiling so it doesn’t matter how much you spend on the refurbishment, the property will only yield a certain rent so it pays to be selective about the home improvements you do and not waste money.
Another typical problem is not researching the demand for the property you are buying. This can lead to long periods of void tenancy whilst trying to find a tenant and meanwhile the mortgage payments still need to be made.
What savvy investors are doing
Issues like this can really take the shine off being involved in property investing and that’s why savvy investors are now turning to furnished new build developments and purpose-built student accommodation because they don’t come with the hassle that can be associated with traditional property investments.
These types of developments represent a problem-free, hands-off investment where a property management company looks after all the tenancies and maintenance issues on your behalf. As an investor this allows you to focus on building your property portfolio rather than having to project manage a property refurbishment.