How to Invest in Property and make Money

The main aim of property investing is to make money. Whether you buy a property, refurbish it and rent it out or buy a property, refurbish it and sell it on the main goal will be to make a profit.

Now, because the rental income you can achieve from a property is capped the only way to invest in property and generate profit is to buy below market value. The cheaper you can buy an investment property the better…providing it’s in a decent location and it doesn’t take several months to refurbish.

So how do you invest in property below market value?

Auction Property

 If you’re serious about investing in property then the property auctions are where you should be. Here you can often find properties suitable for rental purposes at 20-30% less than their actual market value. Some are in need of refurbishment and modernisation but in return you get an investment property with instant equity and at a price you can afford.

The only real drawback to property auctions is that the vendor (not the auction house) will leave the property on the open market until the purchase is complete i.e. until you hand over the full purchase amount. This means that if you choose to invest in property from an auction house there is a small chance of being gazumped before the sale is complete. Obviously if the property is being sold at auction in the first place then it failed to sell with an estate agent and so the probability of losing the property is quite small.  

Estate Agents

Contrary to popular belief it is possible to invest in property below market value from an estate agent. The key is to look for properties that have been on the market for more than 6 months and that have dropped in price over time. Price drops show that a vendor is motivated to sell their property, either because of a need to relocate or because of financial difficulties. The more motivated a seller is the easier it is to make a BMV offer and have it accepted.

Before doing this however you need to look at the reasons for the property not selling in the first instance. It may just be that the vendor was asking too much because they were in a negative equity situation, or it may be that there’s a problem with the property that’s easy to fix.

For example, some properties are classed as non-mortgagable because they aren’t fit for habitation on the day the surveyor visits e.g. they may not have adequate central heating, a usable kitchen or bathroom etc. and this is something to look out for. If you’re using a buy to let mortgage to invest in property then obviously this type of property isn’t for you, but if you intend to pay cash you can often get a big discount on the sale price because you can buy where most can’t i.e. the non-mortgagable status rules out most interested buyers.

Advertising

If you have the financial means to quickly buy BMV properties, either with buy to let mortgages or with cash, then you should advertise in your local newspapers and on the internet. You’d be amazed how many people will agree to sell their property at a BMV price if they can then rent it back. This is in many ways the perfect way to invest in property as you get a great deal and a sitting tenant from the start.