Sam Najafi, Property Writer: Investing in Real Estate

Sam Najafi, property writer, takes a keen interest in renovations, DIY, regeneration and eco homes, as well as money management and moving abroad. This article will explore the different options for real estate investors and how to get started with investing in property.

When weighing up the different investment options, there are many avenues to explore. While cryptocurrency and forex may be too volatile for beginner investors, bonds, stocks, mutual funds and property are generally regarded as sound investments irrespective of the investor’s experience level. Which option the investor selects will depend on three factors: how much money they have to invest, their risk tolerance, and how involved they want to be in their investment.

A traditional mortgage usually requires a down payment. In some instances, this may be as little as 5%. Some property investors focus on buying up undervalued real estate, renovating it and selling it quickly in order to generate a fast return. Meanwhile, another popular way to make money is to buy property and hold onto it, renting it out to a tenant. Landlords benefit from a steady income stream in the form of regular rent payments, as well as price appreciation if the property value increases over time. They can maximise capital through leverage, as well as claiming associated tax-deductible expenses. However, they do run the risk of tenants potentially damaging their property and reduced income if the property stands vacant.

For investors considering getting started with buy-to-let, it is important to appreciate that a buy-to-let mortgage is generally more difficult to access than a homebuyer mortgage, requiring a clear credit record and substantial deposit. However, with soaring property prices and high renter demand, many buy-to-let investors generate a healthy monthly income, benefiting from capital growth when they come to sell later on. In addition, it is also possible for landlords to insure against damage caused by the tenants, as well as legal costs and loss of rental income.

Buying and owning property can be a satisfying and lucrative investment strategy, with a sound real estate investment providing a healthy return. If an investment incurs a high level of risk, it is important that the investor balances this out by achieving the highest possible reward. Conversely, investments with a high probability of success tend to generate more modest returns. However, it is important for real estate investors to keep in mind that, as with most types of investment, buying any type of property incurs risk. Markets fluctuate and properties can go down as well as up in value, which is why savvy property investors never invest money they cannot afford to lose.