The property purchased to generate profit through rental income and/or by capital gains and is not occupied by the owner is known as Investment Property. Many of the richest people in the world have an empire that revolves around property. Though, investment in property has been the domain of the super rich or large institutions, the trend has finally changed. Now even the average man or woman in the street can invest in this area of market. For many people, property has replaced the traditional forms of investments.

 

Why should one go for Investment Properties? Investing in properties helps you to achieve either capital gains or/and cash flow gains. However, it is the type of property that determines the profit. Unlike conventional investments, you receive an income from the rents. You also need to see the value of your property in regular intervals. Surveying the value of your property gives you a unique opportunity to borrow money and fund your capital investment. You can use the rents to finance the borrowing and thereby allow the investment to grow unhindered.

Financing your Investment
Once you are through with the selection of property, your search to fund the project begins. Until recently, the specialist lenders only considered lending to the people who had sufficient means to repay the mortgage without any rental income coming in. Now, the mainstream lenders have become more receptive to the idea and are developing policies to lend on this type of proposition to the ordinary man/woman. With the lenders ready to take rental income into account while deciding on the amount they can lend, it has become possible for common man, fairly well committed with the personal mortgage, to borrow against an investment property.

Buying at an Auction
The potential of bargaining for a property at an auction attracts people towards it. A property is sold at an auction when the vendor has to move out either because of debts, bankruptcy or repossession or when a housing association no longer needs it.

If you're thinking of buying a property at an auction, firstly collect the brochures from the leading auction companies, or you can find the name of the auctioneers operating in your area through the estate agents. This can be followed by attending several auctions, as this will help you to prepare yourself and boost your confidence.

When you are buying at an auction always remember that if your bid is accepted, you need to sign a bidding contract an have to deposit 10 per cent of the deposit money on signing of the contract on that particular day. You can pay the balance amount within the next 28 days. If you fail to pay the balance in time, you risk your deposit and can find yourself being sued for breach of contract by the vendor. Therefore you need to take care to protect yourself before attempting to bid for a property in addition to legal advice at an early stage.

Letting and Managing your Investment
Letting agents provide a wide range of services like finding the tenant for the landlord. .They arrange the tenancy agreement to a full management service which includes collection of rent and dealing with repair problems, but at a cost. Some even provide a service whereby they can find and buy a suitable investment property on your behalf.

For the service of letting agent, you need to sign an agreement after which, the letting agent arrange for an inventory to be drawn up and a Schedule of Condition. The deal is signed only after mutual agreement.

Once through with the deal it is necessary to notify the concerned authorities to the utilities like gas, electricity, water and telephone. Even the tenant should be advised to check the same to avoid liabilities for bills.

Ensure that a safety check for gas appliances, electrical installations and other gadgets are carried out prior to your tenant taking possession.