ooking to quickly build a fully developed or have only just
million pound property received planning permission.
portfolio? You could try a Developers tend to offer larger
high risk and speculative discounts to people who are
technique that has been used over prepared to buy properties at
recent years by investors hoping this stage of the build.
to make big profits from
property. On completion, the investor will
refinance the properties. A
The technique relies on combination of rising house
re-mortgaging and negotiating prices and the discounts gained
good discounts on off-plan at purchase, ensure that the
property to take a "£50,000 property is refinanced at a
deposit and turn it into a higher figure than the original
million pound property portfolio purchase price. The extra money
within a couple of years or less. gained through refinancing is
then be used as a deposit for
another two properties.
How does it work?
This cycle will be repeated a
The technique only works in areas number of times by the investor
where house prices are rising until they have built up a strong
fast and opportunities exist to portfolio of investment
purchase off-plan properties, properties, with a combined value
where discounts of up to 15% are of more than a million pounds.
not uncommon.
High-risk strategy
Investors begin by purchasing one
or two off-plan properties. These Sounds easy, so why doesn't
are properties that are not yet everyone do it? Although many
investors have made a lot of problems if the properties are
money using this technique over sold
recent years, it does contain a
very high element of risk and Further advice
relies on a number of market
conditions being right. Before deciding to use this
property investment technique, it
Potential obstacles include: is essential to get further
advice on the legal, tax and
-- Falling house prices financial issues.
-- Inability to obtain genuine A number of property investment
off-plan discounts companies exist to help advise
their members on these very
-- Poor quality or undesirable speculative investments, but be
developments wary of the less scrupulous
companies that charge their
-- Difficulty in finding tenants members "£1,000s to attend
to maintain rental income that in seminars or build portfolios on
turn pays the mortgage costs their behalf.
-- Potential capital gains tax
About the Author:
Don Suter is Managing Editor of the UK Property Portal (http://www.ukpropertyportal.co.uk), an online directory and magazine for UK property sales, rental, surveyors, mortgages, conveyancing, property insurance, removals, news, investment and development.
Source: www.isnare.com
