Probably one of the most common questions: Where should I invest? The answer is varied both in relation to your level of commitment and risk and also to your level of experience and knowledge.
We are going to avoid the question of what type of property you should invest in but simply look at the geographical implications of investing in residential property. In regards to the novice or somebody who is just embarking in the business, this is important. The first question will undoubtedly be "what can I invest in with the capital that I have."
Here, the traditional north-south divide will probably pay part in this decision process since the fluctuations in prices are still dramatically different between the two halves. According to the Halifax Price Index, the average house price in the south is £265,921 compared to £158,636 in the north, and this is still increasing. In fact, over the previous two years, the difference between the south and the north has actually risen from 56 to 68%. Yes, rents should be proportionally lower as with the capital appreciation, but it is the initial cost of entry to the market that will therefore point the novice into their chosen area.
The above scenario is generally conditional to the commitment and risk level that these investors have. A novice will always be concerned more about the level of risk rather than reward. They will try and stay within their own parameters, which means that they will also need to stay within their knowledge comfort zones. Since they are just embarking on property investing, they have limited knowledge and will understand little about the factors that will affect a professional investor.
Investors learn over time and with education about creative finance, OPM (other people's money), cash backs, back-to-back mortgages, seller finance, etc., which will help you decide on the property, not just the area. This will mean that they can afford the higher entry fees of the south since with these methods they will actually understand that their entry fee will be considerably less if not completely non-existent.
So the question should actually be not "where do I invest" but "how do I learn to invest."
Within the last six years, this process has been clearly evident with the students that Whitney UK has taught. You can see the road that these students have travelled, which ultimately is why Whitney UK has been required to create new and more advanced courses as these students have needed them.
Most students have begun by purchasing terraced properties in Burnley, Hull, Bolton, etc. As they have learned the business, they have expanded to HMOs, renovations, corporate lets, overseas investments, commercial properties and lease options. Now, the more senior students are into self-build and developing. It is a natural road to follow, and a natural road that Whitney UK has happily travelled with our students. |
